Abstract
The properties of the procedure for measuring inefficiency developed by Debreu (1951, 1954) are summarised, and the advantages of such an input-based approach in analysing taxation discussed. Exact expressions for the Debreu measure of deadweight loss are derived, and the measure proposed by Kay (1980) shown to be a special case. The approach is pursued to construct and interpret a measure of the overall welfare loss from taxation, which decomposes conveniently into efficiency and distributional components. In one special case the corresponding index of total effectiveness is the product of Debreu's coefficient of resource utilisation and an Atkinson equality index.
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