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.
- Lindahl equilibrium,
- income redistribution,
- Pareto optimality
Available at: http://works.bepress.com/ted_bergstrom/85/