A Scandinavian Consensus Solution for Efficient Income Distribution Among Nonmalevolent Consumers

Ted Bergstrom, University of California, Santa Barbara

Abstract

If Persons A and B are both benevolent to C, then a gift from A to C also benefits B. Thus C's income is like a public good to A and B. What happens with lots of people whose affections are entangled? This paper shows that a "distributional Lindahl equilibrium" exists and leads to an efficient income redistribution.