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- Title
WELFARE ECONOMICS AND RATIONING.
- Authors
Reder, M.W.
- Abstract
This article focuses on the significance of rationing during the period when there is an acute shortage of commodities. Although it has only recently been given rigorous proof, the theorem that an income tax is superior to any tax levied on commodities' has long been regarded as a fundamental proposition of welfare economics. In spite of this fact, many economists have advocated that during war, or other periods when there is an acute shortage of certain goods, rationing be substituted for the price mechanism in order to allocate the scarce commodities. Such recommendations have usually been made on practical grounds, e.g. the price system is too cumbersome, hardships and injustice would be visited upon the poor if the price system were allowed to function unhampered by state intervention. The theorem asserts that if an individual is exempted from a commodity tax and is simultaneously saddled with an income tax of an amount equal to that otherwise paid in commodity taxes, he will in no case be forced to accept a lower level of satisfaction, and in most cases will be able to obtain a higher level of satisfaction than he would otherwise have been able to attain.
- Subjects
WELFARE economics; INCOME tax; RATIONING; SOURCE rules; INCOME averaging; ECONOMIC policy
- Publication
Quarterly Journal of Economics, 1942, Vol 57, Issue 1, p153
- ISSN
0033-5533
- Publication type
Article
- DOI
10.2307/1881818