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Welfare targeting in networks

Allouch, Nizar, King, Maia (2021) Welfare targeting in networks. Journal of Mathematical Economics, . ISSN 0304-4068. (doi:10.1016/j.jmateco.2021.102508) (KAR id:87462)


This paper investigates welfare targeting for public goods in networks. First, we show that a tax/subsidy scheme (not necessarily budget-balanced) affects each consumer only insofar as it affects his neighbourhood. Second, we show that either a Pareto-improving income redistribution can be found or there exist Negishi weights, which we relate to the network structure. Third, in the case of Cobb–Douglas preferences, we show that a law of welfare targeting holds and links two well-known notions of the comparative statics of policy interventions: neutrality and welfare paradoxical effects. Collectively, our findings uncover the importance of the −1 eigenvalue to economic and social policy: it is an indication of how consumers absorb the impact of income redistribution.

Item Type: Article
DOI/Identification number: 10.1016/j.jmateco.2021.102508
Uncontrolled keywords: Public goods, tax/subsidy, welfare, network, −1 eigenvalue.
Subjects: H Social Sciences
Divisions: Divisions > Division of Human and Social Sciences > School of Economics
Depositing User: Nizar Allouch
Date Deposited: 06 Apr 2021 12:18 UTC
Last Modified: 15 Sep 2022 23:00 UTC
Resource URI: (The current URI for this page, for reference purposes)

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