Beyond the Horizon: Attainability of Pareto Optimality when the Indefinite Future Matters
AbstractIn this paper we study the attainability of Pareto optimal allocations in infinitedimensional exchange economies where agents have utility functions that value consumption at infinity. Such a model can be used to model economic settings where the indefinite future matters. The commodity space that we use is the space of all convergent sequences. We derive a necessary and sufficient condition for the attainability of the Pareto optimal allocations, which states that, for each pair of consumers, the ratio of the weights they place on utility in finite time periods should converge to the ratio of their utility weights at infinity. This, in turn, implies that efficiency can only be attained if consumersâ€™ valuations of time are very similar. We extend the model to include consumers with Rawlsian preferences and find that this does not change the attainability of Pareto optimal allocations.
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 InfoPaper provided by Department of Economics, University of York in its series Discussion Papers with number 12/29.
Date of creation: Oct 2012
Date of revision:
Contact details of provider:
Postal: Department of Economics and Related Studies, University of York, York, YO10 5DD, United Kingdom
Phone: (0)1904 323776
Fax: (0)1904 323759
Web page: http://www.york.ac.uk/economics/
More information through EDIRC
Infinite horizon exchange economy; Pareto optimality; non-discounting preferences;
Find related papers by JEL classification:
- D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-11-11 (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.:
- Donald J. Brown & Lucinda M. Lewis, 1978.
"Myopic Economic Agents,"
Cowles Foundation Discussion Papers
481, Cowles Foundation for Research in Economics, Yale University.
- Graciela Chichilnisky, 2012. "Sustainable markets with short sales," Economic Theory, Springer, vol. 49(2), pages 293-307, February.
- Graciela Chichilnisky, 2012. "Economic theory and the global environment," Economic Theory, Springer, vol. 49(2), pages 217-225, February.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Paul Hodgson).
If references are entirely missing, you can add them using this form.