Destruction or transfer

This paper investigates the relationship between the “transfer paradox” and “destruction paradox”. We address two key questions: (1) When faced with either paradox, is destruction or transfer more effective in improving the utility of the donor? (2) Does the existence of one paradox imply the existence or absence of the other? For a two-good economy, the destruction paradox always exists and is preferable when the transfer paradox decreases the price of the non-transferred good, but never occurs when the transfer paradox increases it. When the destruction paradox exists, destruction is always more effective than transfer for improving utility. • When transfer paradox lowers the foreign-good price, destruction is preferred. • If transfer paradox raises that price, destruction paradox does not occur. • When destruction paradox exists, destruction is preferred to transfer. • Results extend to multi-good settings.