Benefit function and individual preferences.: A generalization of the Zero-Maximum principle.

Abstract

In this paper we show that given a utility threshold Luenberger�s benefit function correctly represents individual preferences as long as specific reference commodity bundles are considered. We further show a condition which is sufficient for reaching Pareto optimality that generalizes the zero-maximum principle proposed by Luenberger. Under our hypothesis, the social benefit could be positive, negative or zero, and not necessarily always zero