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Social objectives in general equilibrium

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  • Rachmilevitch, Shiran

Abstract

I consider an exchange economy in which each agent’s preferences are given by Ui=ui+θF, where ui is a standard utility function, F is a social objective function and θ is the weight F receives. Both F and θ are common to all individuals. I show that F’s equilibrium value may be a decreasing function of θ. I also show that if F is a social welfare function whose arguments are the ui’s, then the economy’s equilibria are independent of θ.

Suggested Citation

  • Rachmilevitch, Shiran, 2016. "Social objectives in general equilibrium," Economics Letters, Elsevier, vol. 148(C), pages 99-102.
    • Handle: RePEc:eee:ecolet:v:148:y:2016:i:c:p:99-102
    DOI: 10.1016/j.econlet.2016.09.033
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    References listed on IDEAS

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    1. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
    2. Martin Dufwenberg & Paul Heidhues & Georg Kirchsteiger & Frank Riedel & Joel Sobel, 2011. "Other-Regarding Preferences in General Equilibrium," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 78(2), pages 613-639.
    3. Dow, James & da Costa Werlang, Sergio Ribeiro, 1988. "The consistency of welfare judgments with a representative consumer," Journal of Economic Theory, Elsevier, vol. 44(2), pages 269-280, April.
    4. Milchtaich, Igal, 2012. "Comparative statics of altruism and spite," Games and Economic Behavior, Elsevier, vol. 75(2), pages 809-831.
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    More about this item

    Keywords

    General equilibrium; Consumption externalities; Other-regarding preferences; Social objectives;
    All these keywords.

    JEL classification:

    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • D62 - Microeconomics - - Welfare Economics - - - Externalities

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