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Nonexistence of constrained Efficient Equilibria when Markets are Incomplete

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We consider economies with incomplete markets, production, and a given distribution of initial endowments. The main purpose of the paper to present a robust example of an econmy with only one firm and one good per state in which no production dicision entails a constrained efficient outcome. In particular, the unique Dréze equilibrium is dominated by every other production decision.

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File URL: http://homepage.univie.ac.at/Papers.Econ/RePEc/vie/viennp/vie0111.pdf
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Paper provided by University of Vienna, Department of Economics in its series Vienna Economics Papers with number 0111.

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Date of creation: Aug 2001
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Handle: RePEc:vie:viennp:0111

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Web page: http://www.univie.ac.at/vwl

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  1. Kenneth J. Arrow, 1950. "A Difficulty in the Concept of Social Welfare," Journal of Political Economy, University of Chicago Press, vol. 58, pages 328.
  2. Guesnerie, Roger, 1975. "Pareto Optimality in Non-Convex Economies," Econometrica, Econometric Society, vol. 43(1), pages 1-29, January.
  3. Egbert Dierker & Hildegard Dierker & Birgit Grodal, 1999. "Incomplete Markets and the Firm," CIE Discussion Papers 1999-05, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
  4. John Geanakoplos & Michael Magill & Martine Quinzii & J. Dreze, 1988. "Generic Inefficiency of Stock Market Equilibrium When Markets Are Incomplete," Cowles Foundation Discussion Papers 863, Cowles Foundation for Research in Economics, Yale University.
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Cited by:
  1. Tarun Sabarwal, 2004. "Value Maximization As An Ex Post Consistent Firm Objective When Markets are Incomplete," GE, Growth, Math methods 0406002, EconWPA, revised 19 Jul 2004.
  2. Tarun Sabarwal, 2004. "A Consistent Firm Objective When Markets are Incomplete: Profit Maximization," Econometric Society 2004 North American Summer Meetings 141, Econometric Society.
  3. Egbert Dierker & Hildegard Dierker & Birgit Grodal, 2002. "Are Incomplete Markets Able to Achieve Minimal Efficiency?," Discussion Papers 03-09, University of Copenhagen. Department of Economics.
  4. Britz Volker & Herings Jean-Jacques & Predtetchinski Arkadi, 2010. "Theory of the Firm: Bargaining and Competitive Equilibrium," Research Memorandum 057, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  5. Ritzberger, Klaus, 2005. "Shareholder voting," Economics Letters, Elsevier, vol. 86(1), pages 69-72, January.
  6. Volker Britz & P. Herings & Arkadi Predtetchinski, 2013. "A bargaining theory of the firm," Economic Theory, Springer, vol. 54(1), pages 45-75, September.
  7. Stefano Demichelis & Klaus Ritzberger, 2011. "A general equilibrium analysis of corporate control and the stock market," Economic Theory, Springer, vol. 46(2), pages 221-254, February.
  8. Egbert Dierker & Hildegard Dierker, 2010. "Drèze equilibria and welfare maxima," Economic Theory, Springer, vol. 45(1), pages 55-63, October.
  9. Bejan, Camelia, 2008. "Production and financial decisions under uncertainty," MPRA Paper 11033, University Library of Munich, Germany.
  10. Guido Ruta & Piero Gottardi, 2009. "Equilibrium corporate finance," 2009 Meeting Papers 149, Society for Economic Dynamics.
  11. CRES, Hervé & TVEDE, Mich, 2004. "The Dreze and Grossman-Hart criteria for production in incomplete markets: Voting foundations and compared political stability," Les Cahiers de Recherche 794, HEC Paris.

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