A Positive Theory of Welfare
23 Pages Posted: 3 Dec 2009 Last revised: 4 Oct 2013
Date Written: December 2, 2009
Abstract
This paper proves that the community indifference curve can take any shape, the welfare function has random walk, and the utility possibility curve is unlimited. This paper proposes to use profit as a new measure of welfare. It uses this new measure to derive the trade offer curve, to prove that perfect competition is very much more efficient, and to show that taxation not only causes welfare loss, but also creates unemployment. Welfare Economics becomes more positive then.
Keywords: Community Indifference Curve, Welfare Economics, Utility Possibility Curve
JEL Classification: D10, D60, D63
Suggested Citation: Suggested Citation
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