On the Allocative Efficiency of Competitive Prices in Economies with Incomplete Markets
AbstractA new measure of constrained efficiency for application in economies with incomplete markets is presented. This measure --- termed Allais- Malinvaud efficiency --- can be viewed as adjusting for market incompleteness not fully captured in previous work. It is shown that equilibrium allocations in Radner-GEI economies are always Allais- Malinvaud efficient. In particular, a re-distribution of assets in equilibrium cannot induce a relative price change that leads to an Allais-Malinvaud improvement. Moreover, this result extends to Radner- GEI economies in which consumer liability is limited by bankruptcy.
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Bibliographic InfoPaper provided by EconWPA in its series GE, Growth, Math methods with number 0410006.
Length: 38 pages
Date of creation: 05 Oct 2004
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Note: Type of Document - pdf; pages: 38
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Allocative Efficieny; Incomplete Markets; Allais-Malinvaud Efficiency;
Find related papers by JEL classification:
- D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
- D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-10-21 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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The B.E. Journal of Theoretical Economics,
De Gruyter, vol. 7(1), pages 1-21, January.
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- Tarun Sabarwal, 2004. "A Consistent Firm Objective When Markets are Incomplete: Profit Maximization," Econometric Society 2004 North American Summer Meetings 141, Econometric Society.
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