The New Welfare
Economics identified conditions for what it called a
general social optimum
. This problem was solved without
assumptions of interpersonally comparable or measurable utility.
Bergson, A. A reformulation of
certain aspects of welfare economics.
QJE 1938
Lange, O. The foundations of welfare economics.
Econometrica
1942
A Bergson Social welfare function maps consumption and production
to $\mathbb{R}$.
\begin{equation*}
\text{Welfare}=W\bigl(U_1(x_1),\ldots,U_N(x_N)\bigr)
\end{equation*}
He derives the marginal conditions that characterize
optimality. Lange maxes $U_i$ subject to all $U_j$ fixed and
technology and resource constraints to get P.O.
The welfare theorems and public economics are the chief
accomplishments of the NWE.
toc