This clear, precisely written text presents an important branch of the modern, micro-economically based theory of industrial organization and of public finance, utilizing calculus only. Answers are provided to some pertinent economic questions, such as the pricing policies of vote-seeking politicians, of empire-building bureaucrats and of out-put-maximizing and energy-saving public utilities. These policies are compared with the welfare economic benchmark rules e.g. on marginal cost pricing and Ramsey pricing. Great significance is attached to price regulation. The book elucidates the recent replacement of rate of return regulation by price-cap regulation. It also explains why many simple rules like yardstick regulation fail to achieve optimal prices, which shows how complicated it is to induce managers to truthfully reveal their private information. How this can be achieved properly is shown in various principal-agent models on regulation with uncertain costs, uncertain demand and with soft budget constraints.

This book investigates the way in which tax systems affect economic efficiency and the distribution of welfare. It examines within a unified framework questions that are usually treated in different areas of the literature: institutional economics, positive economics, normative economics, and political economics. It adheres to the rigorous standards of pure theory while paying careful attention to the policy relevance of the arguments. Tax systems are viewed as information extracting devices that generate sets of equilibria of complex geometry. A tax reform methodology is proposed that sheds light on optimal taxes. Social conflicts in the determination of taxes are shown to have effects on social cohesion.

This collection of thirteen essays on social ethics and normative economics honouring Serge-Christophe Kolm's seminal contributions to this field addresses the following questions: How should the public sector price its production and services? What are the normative foundations of criteria for comparing distributions of riches and advantages? How should intergenerational social immobility and inequality in circumstances be measured? What is a fair way to form partnerships? How vulnerable to manipulation is the Lindahl rule for allocating public goods? What are the properties of Kolm's ELIE tax proposal? Would the addition of EU-level income taxes enhance equity? How should we compare different scenarios for future societies with different population sizes? How can domain conditions in social choice theory be justified using Kolm's epistemic counterfactuals? How can Kolm's distributive liberal contract be implemented? What are the implications of norms of reciprocity for the organization of society? The answers to these questions give major insight into the state-of-the-art of social ethics and normative economics and are thus an indispensable source for researchers in both of these fields.

This book discusses the rationale for correcting market prices in the evaluation of public investments. It also aims at covering techniques of project appraisals, such as the effects method, cost efficiency techniques, multicriteria analysis, and related logical frameworks.

Covering all the main problems that arise in a typical cost-benefit exercise, this second edition reflects the most recent research in the area. It considers the main theoretical issues, the problem of ascribing a monetary value to things and includes six separate case studies.

This 1991 book is a selection of Jacques Drèze's work over the last decade on the topics of lasting unemployment, stagflation and unused capacity. At the theoretical level, the author has contributed to the formulation and analysis of general equilibrium models which allow for price rigidities and excess supply and lend themselves to econometric implementation, thus represents an attempt to integrate micro- and macroeconomics, and to use theory for empirical and policy purposes.

We are rarely asked to. make decisions based on only one criterion; most often, decisions are based on several usually confticting, criteria. In nature, if the design of a system evolves to some final, optimal state, then it must include a balance for the interaction of the system with its surroundings certainly a design based on a variety of criteria. Furthermore, the diversity of nature's designs suggests an infinity of such optimal states. In another sense, decisions simultaneously optimize a finite number of criteria, while there is usually an infinity of optimal solutions. Multicriteria optimization provides the mathematical framework to accommodate these demands. Multicriteria optimization has its roots in mathematical economics, in particular, in consumer economics as considered by Edgeworth and Pareto. The critical question in an exchange economy concerns the "equilibrium point" at which each of N consumers has achieved the best possible deal for hirnself or herself. Ultimately, this is a collective decision in which any further gain by one consumer can occur only at the expense of at least one other consumer. Such an equilibrium concept was first introduced by Edgeworth in 1881 in his book on mathematical psychics. Today, such an optimum is variously called "Pareto optimum" (after the Italian-French welfare economist who continued and expanded Edgeworth's work), "effi. cient," "nondominated," and so on.