Independence of Allocative Efficiency from Distribution in the Theory of Public Goods

Ted Bergstrom, University of California, Santa Barbara
Richard Cornes, Nottingham University

Abstract

When is the Pareto optimal amount of public goods independent of income distribution? Subject to some regularity conditions, the answer is when preferences of every individual i can be represented by a utility function of the form U(X_i,Y)=A(Y)X_i+B_i(Y) where X_i is i's consumption of private goods and Y is the amount of public goods.