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Does Dynamic Market Competition with Technological Innovation Leave No One Behind? : An Axiomatic Study in OLG Frameworks

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  • Xu, Yongsheng
  • YOSHIHARA, Naoki

Abstract

The Hicksian optimism, a neoclassical economic creed, says that the consistent implementation of ‘Pareto-efficient policies’ sequentially would eventually improve the welfare of every individual from the initial position in the long run. In this paper, we formulate the Hicksian optimism as an axiom and then examine whether the market mechanism with the consistent application of technological progress policies can fulfill the Hicksian optimism. We show in a simple Overlapping Generations model that the market mechanism with technological progress unavoidably leaves some individuals behind. This negative result holds for a broad class of intertemporal resource allocation mechanisms.

Suggested Citation

  • Xu, Yongsheng & YOSHIHARA, Naoki, 2025. "Does Dynamic Market Competition with Technological Innovation Leave No One Behind? : An Axiomatic Study in OLG Frameworks," Discussion Paper Series 769, Institute of Economic Research, Hitotsubashi University.
    • Handle: RePEc:hit:hituec:769
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    References listed on IDEAS

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    More about this item

    Keywords

    dynamic market competition with technological progress; Hicksian Optimism; Walrasian allocation rule; weak Pareto efficiency; individual rationality; overlapping generations economy;
    All these keywords.

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • D60 - Microeconomics - - Welfare Economics - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • P10 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - General
    • P20 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - General
    • P40 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - General

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