Optimal design of trade institutions
AbstractWe model an economy with social institutions that facilitate trade and induce three types of costs: establishment costs, access costs, and use costs. Use costs are specific transaction costs related to the use of these trade institutions. We assume that a trade institution is economically completely determined by the costs it imposes and by the effects on the trades it facilitates. We extend the Pareto efficiency concept to include various modes of organization of social institutions: the costs and benefits of these organizations are expressed in the trades they facilitate. Within this setting we discuss a valuation equilibrium concept, in which all agents use a common conjectural price system that assigns to every trade institution the price vector that would prevail under it. This feature of the equilibrium is important in securing the second welfare theorem, and is new to the analysis of economies with costly trade. Since the use costs can be nonlinear, there are non-convexities that prevent the second welfare theorem from obtaining in a finite economy, but we show it for large economies. Copyright Springer-Verlag Berlin/Heidelberg 2003
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Springer in its journal Review Economic Design.
Volume (Year): 8 (2003)
Issue (Month): 3 (October)
Contact details of provider:
Web page: http://link.springer.de/link/service/journals/10058/index.htm
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Gilles, R.P. & Lazarova, E.A. & Ruys, P.H.M., 2008. "Stable Economic Cooperation: A Relational Approach," Discussion Paper 2008-25, Tilburg University, Center for Economic Research.
- Ruys, P.H.M., 2005.
"The Governance of Services,"
2005-102, Tilburg University, Center for Economic Research.
- Gilles, R.P. & Lazarova, E.A. & Ruys, P.H.M., 2006.
"Stability, Specialization and Social Recognition,"
2006-17, Tilburg University, Center for Economic Research.
- Robert P. Gilles & Emiliya Lazarova & Pieter H. M. Ruys, 2006.
"On Socio-Economic Roles And Specialisation,"
The Economic Society of Australia, vol. 25(2), pages 157-170, 06.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F Baum).
If references are entirely missing, you can add them using this form.