Some Theorems in the Theory of Efficient Transfers.

by Edgar O. Olsen

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Voucher schemes have been suggested as efficient means of increasing the consumption of certain goods to subsets of the population. The theorems of this paper discuss the circumstances under which a voucher scheme could improve resource allocation, and the characteristics of that scheme. Theorem 1: Voluntary voucher schemes divide eligible families into three subsets: (a) those who won't purchase vouchers, (b) those for whom vouchers are the equivalent of cash grants which they supplement, and (c) those who spend exactly the face value of vouchers on the subsidized good. Theorem 2: If there exists a subset such as (c), then efficient resource allocation requires that the value of the voucher be just sufficient to permit the purchase of an optimal quantity at its market price. The amount charged for the voucher should leave the family with sufficient money for other goods. 15 pp. Ref.

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