The Welfare Economics of Moral Hazard
AbstractThis paper shows that, except in certain limiting cases, competitive equilibrium with moral hazard is constrained inefficient. The first section compares the competitive equilibrium and the constrained social optimum in a fairly general model, and identifies six types of market failure. Each of the subsequent sections focusses on a particular market failure.
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Bibliographic InfoPaper provided by Queen's University, Department of Economics in its series Working Papers with number 635.
Length: 48 pages
Date of creation: 1986
Date of revision:
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- Greenwald, Bruce C & Stiglitz, Joseph E, 1986. "Externalities in Economies with Imperfect Information and Incomplete Markets," The Quarterly Journal of Economics, MIT Press, vol. 101(2), pages 229-64, May.
- Braverman, Avishay & Stiglitz, Joseph E, 1982. "Sharecropping and the Interlinking of Agrarian Markets," American Economic Review, American Economic Association, vol. 72(4), pages 695-715, September.
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