Welfare Dominance: An Application to Commodity Taxation
NBER Working Paper No. 2451
In this paper, we suggest a method which enables the user to identify commodities that all individuals who can agree on certain weak assumptions with regard to the social welfare function will agree upon as worth subsidizing or taxing in the absence of efficiency considerations. The method is based on an extension of the stochastic dominance criteria and is illustrated using data from Israel.
Published: American Economic Review. Volume 81, No. 3, pp.480-496, June 1991