A PARETO-IMPROVING PRODUCTION ASSIGNMENT POLICY OF COLLECTIVE CONSUMPTION GOODS

Abstract

In this paper, a procedure for production assignment of collective consumption goods is formulated. It is an extension of Dréze and Poussin's economic planning procedure to a nontâtonnement type in the sense that it allows actual production and consumption to take place at each of its steps. Hence, unlike in Dréze and Poussin's model, the roles of market mechanisms at each step of the procedure are emphasized. In this context, it is to be noted that the present procedure makes use of not only the markets for the usual private goods but also the markets for“pollution rights”, the setting up of which was advocated by Dales.
The main characteristics of the present procedure are well-definedness, monotonicity, and convergence to Pareto optima.