Why equity cannot be separated from efficiency II: when should social pricing be progressive?

This paper corrects and extends Baiman (2001) by deriving valid conditions that determine when equity factors outweigh efficiency factors in the progressive Ramsey pricing, or “Progressive Social Pricing Rule,” derived in that paper. When these conditions hold, that rule becomes a rule for “ progres...

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Bibliographic Details
Published in:The Review of radical political economics 2002, Vol.34 (3), p.311-317
Main Author: Baiman, Ron
Format: Article
Language:English
Subjects:
Consumers
Economic efficiency
Economics
Efficiency
Equity
Low income
Political science
Pricing
Relative prices
Social pricing
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Summary:This paper corrects and extends Baiman (2001) by deriving valid conditions that determine when equity factors outweigh efficiency factors in the progressive Ramsey pricing, or “Progressive Social Pricing Rule,” derived in that paper. When these conditions hold, that rule becomes a rule for “ progressive social pricing in the usual sense” of lower-income consumers getting relatively lower prices. When price elasticities are directly correlated with income, this becomes a “ direct-elasticity” pricing rule.
ISSN:0486-6134
1552-8502
DOI:10.1016/S0486-6134(02)00172-9