Egbert Dierker (University of Vienna) Hildegard Dierker (University of Vienna) Birgit Grodal (Institute of Economics, University of Copenhagen)
Abstract
In this paper we analyze the welfare properties of the set of Drèze equilibria for economies with incomplete markets and firms. The well known fact that a Drèze equilibrium need not be constrained Pareto optimal is often attributed to a lack of coordination between firms. We show that there are economies with a single firm in which no Drèze equilibrium is constrained Pareto efficient. Even a unique Drèze equilibrium need not be constrained Pareto efficient
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Publisher Info
Paper provided by University of Copenhagen. Department of Economics in its series Discussion Papers with number
99-03.
Length: 28 pages Date of creation: Aug 1999 Date of revision: Handle: RePEc:kud:kuiedp:9903
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