Preferences and Coalitions
- 651 Downloads
Redistribution of income is assumed to require the vote of at least 50 % of all individuals with income and each of them insists to be a winner from the redistribution. When inequality is to be increased in the interest of some, coalition partners must be found by compensation schemes. Compensation minimization is shown to lead to coalition partners being either a connected or a disconnected income group. When inequality reaches certain critical levels, disconnection becomes unavoidable. For one-parametric income distributions, the critical levels are denoted as bifurcation points.
Values of bifurcation points are computed numerically for several one-parametric distributions. For income distributions with two or more parameters the bifurcation point is replaced by a bifurcation function.
KeywordsLoss Function Income Distribution Pareto Distribution Lorenz Curve Bifurcation Parameter
- Barnett WA, He Y (1999) Center manifold, stability, and bifurcations in continuous time macroeconometric systems. In: The winter meetings of the Econometric Society, New YorkGoogle Scholar
- Congleton R (2002) The median voter model. In: Rowley RK, Schneider F (eds) The encyclopedia of public choice. Kluwer, New YorkGoogle Scholar
- Crosen R, Konow J (2009) Social preferences and moral hazard. MPRA, Munich University Library. http://mpra.ub.uni-muenchen.de/18560
- Hale JK, Kocak H (1996) Dynamics and bifurcations. Springer, New YorkGoogle Scholar
- Kämpke T, Radermacher FJ (2011) Analytische Eigenschaften von Equity-Lorenzkurven. FAW Working Paper, UlmGoogle Scholar
- Scilab, The free platform for numerical computation, www.scilab.org
- Sen A (2001) Development as freedom. Oxford University Press, OxfordGoogle Scholar
- Vigdor JL (2006) Fifty million voters can’t be wrong: economic self-interest and redistributive politics. Working Paper 12371. National Bureau of Economic Research, CambridgeGoogle Scholar