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Exit and Power in General Equilibrium

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  • Hans Gersbach
  • Hans Haller

Abstract

We integrate individual power in groups into general equilibrium models. The relationship between group formation, resource allocation, and the power of specific individuals or particular sociological groups is investigated. We introduce, via an illustrative example, three appealing concepts of power and show that there is no monotonic relationship between these concepts. Then we examine existence of competitive equilibria with free exit and study whether maximal individual power is consistent with Pareto efficiency. As applications, we discuss when power spillovers occur and we identify human relation paradoxes: positive externalities increase, but none of the household members gains in equilibrium. We further identify implicit, determinate and de facto power.

Suggested Citation

  • Hans Gersbach & Hans Haller, 2008. "Exit and Power in General Equilibrium," CESifo Working Paper Series 2369, CESifo.
    • Handle: RePEc:ces:ceswps:_2369
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp2369.pdf
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    References listed on IDEAS

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    1. Haller, Hans, 2000. "Household Decisions and Equilibrium Efficiency," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(4), pages 835-847, November.
    2. Patricia Apps & Ray Rees, 2007. "Household Models: An Historical Perspective," CESifo Working Paper Series 2172, CESifo.
    3. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, vol. 56(1), pages 63-90, January.
    4. Makowski, Louis & Ostroy, Joseph M. & Segal, Uzi, 1999. "Efficient Incentive Compatible Economies Are Perfectly Competitive," Journal of Economic Theory, Elsevier, vol. 85(2), pages 169-225, April.
    5. Becker, Gary S, 1993. "Nobel Lecture: The Economic Way of Looking at Behavior," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 385-409, June.
    6. Apps, Patricia F & Rees, Ray, 1997. "Collective Labor Supply and Household Production," Journal of Political Economy, University of Chicago Press, vol. 105(1), pages 178-190, February.
    7. Chiappori, Pierre-Andre, 1992. "Collective Labor Supply and Welfare," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 437-467, June.
    8. Hans Gersbach & Hans Haller, 2002. "Competitive Markets, Collective Decisions and Group Formation," Discussion Papers 02-11, University of Copenhagen. Department of Economics.
    9. Bell, Clive, 1991. "Markets, power and productivity in rural Asia : A review article," Journal of Development Economics, Elsevier, vol. 36(2), pages 373-393, October.
    10. Donald A. Walker (ed.), 2000. "Equilibrium," Books, Edward Elgar Publishing, volume 0, number 1585.
    11. Hans Gersbach & Hans Haller, 2001. "Collective Decisions and Competitive Markets," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 68(2), pages 347-368.
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    Cited by:

    1. Hans Gersbach & Hans Haller, 2009. "Bargaining power and equilibrium consumption," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 33(4), pages 665-690, November.

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    More about this item

    Keywords

    group formation; competitive markets; power; exit;
    All these keywords.

    JEL classification:

    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition
    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • D60 - Microeconomics - - Welfare Economics - - - General

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