Welfare dynamics based on a new concept of inefficient equilibrium
This article has developed a new model of welfare dynamics under imperfect information or imperfect competition by introducing a new concept of ‘inefficient welfare equilibrium’. It assumes that an economy can be split into two virtual parts. For one part the fundamental welfare theorems are valid and for the other part welfare is yet to achieve. This model is enhanced to describe market dynamics where market is not uniform but distributed in layers of energy states. The probability of achieving Pareto efficiency decreases down along the market energy states.
|Date of creation:||18 Aug 2008|
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- Joseph E. Stiglitz, 2000. "The Contributions of the Economics of Information to Twentieth Century Economics," The Quarterly Journal of Economics, Oxford University Press, vol. 115(4), pages 1441-1478.
- Simon, Herbert A, 1986. "Rationality in Psychology and Economics," The Journal of Business, University of Chicago Press, vol. 59(4), pages 209-224, October.
- G. Hodgson., 2007. "What Are Institutions?," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 8.
- Joseph E. Stiglitz, 1991. "The Invisible Hand and Modern Welfare Economics," NBER Working Papers 3641, National Bureau of Economic Research, Inc.
- George J. Stigler, 1967. "Imperfections in the Capital Market," Journal of Political Economy, University of Chicago Press, vol. 75, pages 287-287.
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