Transfers and the Generalized Theory of Distortions and Welfare

Recent theoretical attention devoted to the transfer paradox has included attempts to incorporate it into the body of commercial policy. In this paper, the existence of a family of always-feasible corrective tax policies is proved which guarantees normal welfare response. The set of pol icies is shown to contain the external-trade-fixing tariff and the op timal tariff. The set of policies is then extended to include a capit al-flow-fixing profits tax to deal with the problems of foreign inves tment. The results are then interpreted in terms of a general proposi tion in the theory of distortions and welfare. Copyright 1987 by The Review of Economic Studies Limited

Economics · International economics · Market economy · Mathematical economics · Microeconomics · Public economics · Set (abstract data type) · Tariff · Welfare · Welfare economics · Computer Science · Corporate Taxation and Avoidance · Fiscal Policy and Economic Growth · Taxation and Compliance Studies

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