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- handle: 10670/1.d065wj
- halshs: halshs-03238866
- doi: 10.1016/j.jet.2021.105262
- PII: S0022-0531(21)00079-X
- WOS: 000652015500013
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info:eu-repo/semantics/altIdentifier/doi/10.1016/j.jet.2021.105262
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Mots-clés
Structural reform Deregulation Price controls Pareto optimality Taxation Compensatory transfers E - Macroeconomics and Monetary Economics/E.E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook/E.E6.E64 - Incomes Policy • Price Policy H - Public Economics/H.H2 - Taxation, Subsidies, and Revenue/H.H2.H21 - Efficiency • Optimal Taxation P - Economic Systems/P.P1 - Capitalist Systems/P.P1.P11 - Planning, Coordination, and ReformSujets proches
Duties Fee system (Taxation) Taxation, Incidence of Tax reform Tax policy TaxesCiter ce document
Gilles Saint-Paul, « Pareto-improving structural reforms », HAL-SHS : économie et finance, ID : 10.1016/j.jet.2021.105262
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Résumé
Economists recommend to partly redistribute gains to losers from a structural reform, which in many cases may be required for making the reform politically viable. However, taxation is distortionary. Then, it is unclear that compensatory transfers can support a Pareto-improving reform. This paper provides sufficient conditions for this to occur, despite tax distortions. In a setting where preferences are isoelastic, deregulation is implementable in a Pareto-improving way through compensatory lump-sum transfers, despite that these are financed by distortionary taxes. In a more general setting, there always exist Pareto-improving reforms but they may involve tightening regulation for some goods. I show that if demand cross-price elasticities are not be too large and that the reform is not too unbalanced, deregulation is again implementable in a Pareto-improving way. Finally, I consider counter-examples where some people earn rents associated with informational or institutional frictions, or where non homothetic preferences may make the schemes considered here not viable.