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Welfare Economics and Social Choice Theory

:	Allan M. Feldman, Roberto Serrano
:	Welfare Economics and Social Choice Theory
:	Springer-Verlag
:	9780387293684
:	2
:	CHF 161.50
:

:	Volkswirtschaft
:	English

:	404
:	Wasserzeichen/DRM
:	PC/MAC/eReader/Tablet
:	PDF

This book covers the main topics of welfare economics - general equilibrium models of exchange and production, Pareto optimality, un certainty, externalities and public goods - and some of the major topics of social choice theory - compensation criteria, fairness, voting. Arrow's Theorem, and the theory of implementation. The underlying question is this: 'Is a particular economic or voting mechanism good or bad for society?' Welfare economics is mainly about whether the market mechanism is good or bad; social choice is largely about whether voting mechanisms, or other more abstract mechanisms, can improve upon the results of the market. This second edition updates the material of the first, written by Allan Feldman. It incorporates new sections to existing first-edition chapters, and it includes several new ones. Chapters 4, 6, 11, 15 and 16 are new, added in this edition. The first edition of the book grew out of an undergraduate welfare economics course at Brown University. The book is intended for the undergraduate student who has some prior familiarity with microeconomics. However, the book is also useful for graduate students and professionals, economists and non-economists, who want an overview of welfare and social choice results unburdened by detail and mathematical complexity. Welfare economics and social choice both probably suffer from ex cessively technical treatments in professional journals and monographs.

Allan M. Feldman has taught economics at Brown University for 34 years. He has written and published articles in the areas of general equilibrium theory, fairness and equity, Arrow's theorem, strategy-proofness, majority voting theory, compensation criteria, the value of life, and law and economics. He has taught thousands of Brown undergraduates in a wide variety of courses, and has served for many years as the director of undergraduate studies in economics at Brown. He has also worked as an economics consultant in litigation.

Roberto Serrano is a Professor of Economics at Brown University, where he has worked since 1992 when he got his PhD from Harvard University. His fields of research are economic theory and game theory. He has been an Associate Editor of several journals, including Economic Theory, Mathematical Social Sciences and Research in Economics. He has published over thirty articles in refereed journals, and his research has been supported through fellowships and awards from prestigious institutions, including The Sloan Foundation, the U.S.-Israel Binational Science Foundation, the U.S. National Science Foundation and Spain's Fundacion Banco Herrero.

	Contents	6
	Preface	12
	Introduction	14
	1. The Concerns of Welfare Economics	14
	2. The Concerns of Social Choice Theory	17
	3. Practical Concerns of Welfare Economics and Social Choice Theory	20
	Chapter 1 PREFERENCES AND UTILITY	24
	1. Fundamental Assumptions	24
	2. Best Alternatives and Utility Functions	26
	3. The Formal Model of Preferences	27
	4. Decisions under Uncertainty and Expected Utility	32
	5. Introduction to Social Preferences	37
	6. Exercises	41
	7. Appendix	42
	8. Selected References	43
	Chapter 2 BARTER EXCHANGE	46
	1. Introduction	46
	2. Allocations	47
	3. The Edgeworth Box Diagram	49
	4. Pareto Optimal Allocations and the Core	50
	5. Algebraic Examples	53
	6. Final Notes on the Core: The Number of Coahtions	59
	7. Exercises	59
	8. Selected References	60
	Chapter 3 WELFARE PROPERTIES OF MARKET EXCHANGE	64
	1. Introduction	64
	2. The Two-Person, Two-Goods Model	65
	3. Competitive Equilibrium in an Exchange Economy: Formal Preliminaries	69
	4. The First Fundamental Theorem of Welfare Economics	72
	5. The Second Fundamental Theorem of Welfare Economics	76
	6. An Algebraic Example	83
	7. Exercises	86
	8. Selected References	88
	Chapter 4 WELFARE PROPERTIES OF ^'JUNGLE	88
	92	88
	1. Power as a Basis for Exchange	92
	2. A Model of Indivisible Objects	93
	3. A 4-Person 4-Houses Example	95
	4. Finding a Market Equilibrium with Top Cycles	98
	5. Fundamental Theorems of Welfare Economics and Jungle Economics	100
	6. Exercises	104
	7. Selected References	104
	Chapter 5 ECONOMIES WITH PRODUCTION	106
	1. Introduction	106
	2. Optimal Production Plans	109
	3. Competitive Equilibrium Production Plans	112
	4. The First Fundamental Theorem of Welfare Economics, Production Version	115
	5. The Second Fundamental Theorem of Welfare Economics, Production Version	117
	6. Extending the Production Model, and Combining Production and Exchange	120
	7. An Algebraic Example in a Simple Production Model	124
	8. Exercises	126
	9. Appendix	127
	10. Selected References	128
	Chapter 6 UNCERTAINTY IN EXCHANGE	132
	1. Introduction	132
	2. States of the World	133
	3. Symmetric Uncertainty	134
	4. Examples	141
	5. Asymmetric Information	143
	6. Exercises	152
	7. Selected References	152
	Chapter 7 EXTERNALITIES	156
	1. Introduction	156
	2. Externalities in an Exchange Economy: An Example	159
	3. Pigouvian Taxes and Subsidies: The Exchange Example Continued	163
	4. Pigouvian Taxes and Subsidies: A Production Example	166
	5. Exercises	170
	6. Selected References	171
	Chapter 8 PUBLIC GOODS	174
	1. Introduction	174
	2. The Public Goods Model	175
	3. The Samuelson Public Good Optimality Condition	177
	4. Private Financing of the Public Good and the Free Rider Problem	180
	5. The Wicksell-Lindahl Tax Scheme	182
	6. Fixed Tax Shares and Majority Voting	187
	7. The Demand-Revealing Tax Scheme	189
	8. The Groves-Ledyard Tax Scheme	197
	9. Exercises	201
	10. Selected References	202
	Chapter 9 COMPENSATION CRITERIA	208
	1. Introduction	208
	2. Notational Preliminaries	209
	3. The Pareto Criterion	210
	4. The Kaldor Criterion	212
	5. The Scitovsky Criterion	214
	6. The Samuelson Criterion	215
	7. Compensation Criteria in Exchange Economies	217
	8. Consumer's Surplus — Money Metrics	219
	9. Consumers' Surplus - Boadway Paradox	221
	10. Quasilinear Utility	223
	11. Cost Benefit Analysis with One Good	226
	12. Exercises	227
	13. Selected References	228
	Chapter 10 FAIRNESS AND THE RAWLS CRITERION	230
	1. Introduction	230
	2. Fairness	231
	3. The Rawls Criterion	234
	4. Exercises	238
	5. Selected References	239
	Chapter 11 LIFE AND DEATH CHOICES	242