When Inefficiency Begets Efficiency
Collective consumption decisions taken by the members of a household may prove inefficient. The impact on market performance depends on whether household inefficiencies are caused by inefficient net trades with the market or by inefficient distribution of resources within households. Inefficient internal distribution always results in inefficient equilibrium allocations. This leads us to consider competitive forces as a disciplinary device for households. Competition of households for both resources and members can eliminate or reduce inefficient internal distribution.
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- Chiappori, P.A., 1989.
"Collective Labour Supply and Welfare,"
DELTA Working Papers
89-07, DELTA (Ecole normale supérieure).
- Gersbach, Hans & Haller, Hans, 2001. "Collective Decisions and Competitive Markets," Review of Economic Studies, Wiley Blackwell, vol. 68(2), pages 347-68, April.
- Becker, Gary S., 1978. "The Economic Approach to Human Behavior," University of Chicago Press Economics Books, University of Chicago Press, edition 0, number 9780226041124, July.
- Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, vol. 56(1), pages 63-90, January.
- Hans Gersbach & Hans Haller, 2002.
"Competitive Markets, Collective Decisions and Group Formation,"
02-11, University of Copenhagen. Department of Economics.
- Hans Gersbach & Hans Haller, 2003. "Competitive Markets, Collective Decisions and Group Formation," CESifo Working Paper Series 953, CESifo Group Munich.
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