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Efficiency and Equity in a Society-Economy Integrated Model

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  • Fleurbaey, Marc
  • Kanbur, Ravi
  • Snower, Dennis

Abstract

A model that only focuses on economic relations, and in which eciency and equity are dened in terms of resource allocation may miss an important part of the picture. We propose an inte- grated model that embeds economic activities in a larger game of social interactions, and dene comprehensive notions of eciency and equity. Social interactions provide additional sources of ineciencies and inequalities, including through the mere lack of coordination between the regu- lation mechanisms of the economic sphere and the social sphere. Remedies may require more than market solutions and redistribution of resources. In particular, social norms are likely to play an important role.

Suggested Citation

  • Fleurbaey, Marc & Kanbur, Ravi & Snower, Dennis, 2021. "Efficiency and Equity in a Society-Economy Integrated Model," Working Papers 313754, Cornell University, Department of Applied Economics and Management.
    • Handle: RePEc:ags:cudawp:313754
    DOI: 10.22004/ag.econ.313754
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    1. Marc Fleurbaey & Ravi Kanbur & Dennis Snower, 2025. "Efficiency and equity in a socially-embedded economy," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 79(1), pages 1-56, February.

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