The Inverted C-curve Equity-Efficiency Relationship

Abstract

In this paper we construct a model of the equity-efficiency relationship in a single-product economy with two groups of production participants. We consider situations of dependence and independence of production outcome on the character of distribution. We proceed with analyzing distribution relations from the standpoint of social welfare functions and efficiency of distribution for the whole society. Theoretical analysis builds up to the inverted C-curve model of the equity-efficiency relationship which exceeds the limits of traditional approach to this problem. Analysis of statistical data shows that the model proposed in the article corresponds to the facts much better than the traditional one.