Spatial variation of the marginal utility of income and unequal treatment of equals

摘要: In one of the most famous contributions to “new” urban economics literature, Mirrlees [6] showed that a utilitarian planner, able control distribution income (or endowments) across households, consumption land housing), and population over space, would treat households with identical tastes unequally in sense utility levels vary among them at planner’s optimum. Similar results were obtained by Dixit [2], who even more inequality-averse social welfare functions than result unequal treatment. He concluded only Rawlsian maximin function produce equal treatment outcome.2 This has generated considerable attention (see, e.g., Mills Mackinnon [5]) because its apparently paradoxical nature. The purpose this note is present new way thinking about, making plausible, unequal-treatment result.3 To develop intuition, recall monocentric city models where equals are treated equally, is, have endowments, market equilibrium free mobility characterized utilities for all (assuming preferences). As well known, absence congestion or other failures, Pareto-efficient, producing maximum feasible common level utility. Imagine now coming such an equal-utility equilibrium. Under what conditions planner not want disturb equilibrium? Clearly, necessary condition be utilitarian-optimal marginal same Otherwise, freezing allocation resources every respect,