Erik Lindahl

Erik Lindahl (21 November 1891 – 6 January 1960) was a Swedish economist. He was professor of economics at

It can be seen as an individual's share of the collective tax burden of an economy. The optimal level of a public good is that quantity at which the willingness to pay for one more unit of the good, taken in totality for all the individuals is equal to the marginal cost of supplying that good. Lindahl tax is the optimal quantity times the willingness to pay for one more unit of that good at this quantity.

Erik Lindahl was deeply influenced in this by Knut Wicksell and proposed a method for financing public goods in order to show that consensus politics is possible. As people are different in nature, their preferences are different, and consensus requires each individual to pay a somewhat different tax for every service, or good that he consumes. If each person's tax price is set equal to the marginal benefits received at the ideal service level, each person is made better off by provision of the public good and may accordingly agree to have that service level provided.

Lindahl equilibrium

Lindahl equilibrium is a state of economic equilibrium under a Lindahl tax as well as a method for finding the optimum level for the supply of public goods or services that happens when the total per-unit price paid by each individual equals the total per-unit cost of the public good. It can be shown that an equilibrium exists for different environments.^[1] Therefore, the Lindahl equilibrium describes how efficiency can be sustained in an economy with personalised prices. Leif Johansen gave the complete interpretation of the concept of "Lindahl equilibrium", which assumes that household consumption decisions are based on the share of the cost they must provide for the supply of the particular public good.^[2]

The necessary and sufficient condition for such an

• (i) the sum of the declared willingness be greater than the cost of provision and
• (ii) the minimum willingness to pay is positive and non-zero.

The importance of Lindahl equilibrium is that it fulfills the

• Die Gerechtigkeit der Besteuerung, 1919. (trans. as "Just Taxation: A positive solution", 1958)
• "Some Controversial Questions in the Theory of Taxation",
• Scope and Means of Monetary Policy, two volumes, 1929. (privately published - see Lindahl, 1930)
• "The Place of Capital in the Theory of Price", 1929, Ekonomisk Tidskrift.
• Methods of Monetary Policy, 1930.
• "The Concept of Income", 1933, Essays in Honor of Gustav Cassel.
• "A Note on the Dynamic Pricing Problem", 1934, (published later)
• "The Problem of Balancing the Budget", 1935, Ekon Tidsk.
• Studies in the Theory of Money and Capital, 1939. (English translations of 1929, 1930, 1935).
• "Metodfragor inom den dynamiska teorien", 1942, Ekon Tidsk.
• "Sweden's Monetary Policy and Tax Policy After the War", 1943, Ekon Tidsk.
• "Some Aspects of the Inflation Problem", 1948, Nationalok Tidsk.
• "On Keynes's Economic System", 1954, Economic Record.
• "Basic Concept of National Accounting", 1957, IER.

Works

• 1956: President of the International Economic Association
• 1939: Studies in the Theory of Money and Capital
• 1919: Die Gerechtigkeit der Besteuerung (German, translated as Just Taxation: A positive solution, 1958)

See also

• Lindahl tax
• Lindahl–Bowen–Samuelson conditions

References