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Stone Age Equilibrium

Author

Listed:
  • Harold Houba

    (VU University Amsterdam)

  • Hans-Peter Weikard

    (Wageningen University, and Mansholt Graduate School)

Abstract

We introduce the notion of a stone age equilibrium to study societies in which property rights are absent, bilateral exchange is either coercive or voluntary, and relative strength governs power relations in coercive exchange. We stress the importance of free disposal of goods which allows for excess holdings larger than consumption, thereby modelling the power to withhold goods from others. Under complete, transitive, continuous and strictly-convex preferences, stone age equilibria exist. The maximum of the lexicographic welfare function in which agents are ranked by descending strength always corresponds to a stone age equilibrium. Every stone age equilibrium is weakly Pareto efficient.

Suggested Citation

  • Harold Houba & Hans-Peter Weikard, 2009. "Stone Age Equilibrium," Tinbergen Institute Discussion Papers 09-092/1, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20090092
    as

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    File URL: https://papers.tinbergen.nl/09092.pdf
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    References listed on IDEAS

    as
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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Even coercion is Pareto efficient
      by Economic Logician in Economic Logic on 2010-07-05 19:10:00
    2. Poverty & attitudes, chickens & eggs
      by chris dillow in Stumbling and Mumbling on 2010-05-20 17:47:09

    Citations

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    Cited by:

    1. Ansink, Erik & Gengenbach, Michael & Weikard, Hans-Peter, 2012. "River Sharing and Water Trade," Climate Change and Sustainable Development 122860, Fondazione Eni Enrico Mattei (FEEM).

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    More about this item

    Keywords

    Power; Exchange Economy; Coercive Trade; Voluntary Trade; Power to Take;
    All these keywords.

    JEL classification:

    • D0 - Microeconomics - - General
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • P0 - Political Economy and Comparative Economic Systems - - General

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    This item is featured on the following reading lists, Wikipedia, or ReplicationWiki pages:
    1. Economic Logic blog

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