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A re-examination of constrained Pareto inefficiency in economies with incomplete markets

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  • Mendolicchio, Concetta

    (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])

  • Pietra, Tito

Abstract

"We establish that, when the number of agents is sufficiently large, but finite, there are open sets of economies with constrained Pareto inefficient equilibria, and provide a simple sufficient condition for CP inefficiency. We also show that there are open sets of economies with CPO equilibria." (Author's abstract, IAB-Doku) ((en))

Suggested Citation

  • Mendolicchio, Concetta & Pietra, Tito, 2016. "A re-examination of constrained Pareto inefficiency in economies with incomplete markets," IAB Discussion Paper 201612, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  • Handle: RePEc:iab:iabdpa:201612
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    References listed on IDEAS

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    1. Julio Dávila & Jay H. Hong & Per Krusell & José‐Víctor Ríos‐Rull, 2012. "Constrained Efficiency in the Neoclassical Growth Model With Uninsurable Idiosyncratic Shocks," Econometrica, Econometric Society, vol. 80(6), pages 2431-2467, November.
    2. Mario Bossler & Hans-Dieter Gerner, 2020. "Employment Effects of the New German Minimum Wage: Evidence from Establishment-Level Microdata," ILR Review, Cornell University, ILR School, vol. 73(5), pages 1070-1094, October.
    3. Siconolfi, P & Villanacci, A, 1991. "Real Indeterminacy in Incomplete Financial Market Economies without Aggregate Risk," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 1(3), pages 265-276, July.
    4. M. Salto & T. Pietra, 2013. "Welfare and excess volatility of exchange rates," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 52(2), pages 501-529, March.
    5. Atsushi Kajii & Antonio Villanacci & Alessandro Citanna, 1998. "Constrained suboptimality in incomplete markets: a general approach and two applications," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 11(3), pages 495-521.
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    12. Joseph E. Stiglitz, 1982. "The Inefficiency of the Stock Market Equilibrium," Review of Economic Studies, Oxford University Press, vol. 49(2), pages 241-261.
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    Cited by:

    1. Mendolicchio, Concetta & Pietra, Tito, 2018. "Full and constrained pareto optimality with incomplete financial markets," IAB Discussion Paper 201822, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

    More about this item

    Keywords

    Markttheorie; Verteilungstheorie; Marktunvollkommenheit; Pareto Vilfredo; Finanzmarkt; Gleichgewichtstheorie; Marktgleichgewicht; Gütermarkt; Preistheorie;

    JEL classification:

    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets

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