I think what Kwak is alluding to is the ability to pay. ISTM there are two ways in which this could prevent the optimum welfare (taking into account distribution): (a) the wealthy use up the scarce resources before the poor have had a chance to claim a stake (this is what happens with tickets for concerts, for example) and (b) the market price for the good or service in question is beyond the ability to pay of the poor.

I don’t think (a) is generally a problem (see my response to The Suburbanist), but (b) can be.

Now in a pragmatarian setup that does not have to be the case: everyone “pays” the same (smallish) amount, and then allocates that resource according to preferences. As long as the amount is sufficiently affordable, it will produce an allocation of resources that is very good (I don’t have time to do the maths to work out whether it’d be really optimum, but maybe you can! :-)

Alternatively, the stake in the pragmatarian market place could be an endowment to everyone, so that affordability no longer matters.

Accidental behavioural economist in search of wisdom. Uses insights from (behavioural) economics in organization development. On Twitter as @koenfucius

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