OPTIMAL TECHNIQUES OF REDISTRIBUTION

Legal scholars have often argued that a legal system in providing a ‘level playing field ’ for consumers and producers should be designed to help in society’s efforts to achieve an optimal distribution of income. This chapter reviews research by law and economics scholars that challenges this premise. Using neoclassical welfare economics most of these scholars conclude that there exists a taxation scheme that achieves a desired income distribution and is preferred by all members of society to any plan for redistributing income using the legal system. An implication of this research is that economic efficiency and not fairness is the appropriate criteria for evaluating any legal rule. JEL classification: K0, H