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Saving Private Pareto

Author

Listed:
  • Harold Houba

    (VU University Amsterdam)

  • Roland Iwan Luttens

    (Amsterdam University College)

  • Hans-Peter Weikard

    (Wageningen University)

Abstract

We include initial holdings in the jungle economy of Piccione and Rubinstein (Economic Journal, 2007) and relax the assumptions on consumption sets and preferences. We show that initial holdings are irrelevant for lexicographic welfare maximization. Equilibria other than such maximizers can be jungle equilibria due to myopia. We show that farsightedness restores the equivalence between jungle equilibria and lexicographic welfare maximization. However, we also derive farsighted equilibria in which stronger agents withhold goods from weaker agents. Then, gift giving by stronger agents is needed to restore Pareto efficiency. Our results add to understanding coercion and the crucial assumptions underlying jungle economies.

Suggested Citation

  • Harold Houba & Roland Iwan Luttens & Hans-Peter Weikard, 2013. "Saving Private Pareto," Tinbergen Institute Discussion Papers 13-053/II, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20130053
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    File URL: https://papers.tinbergen.nl/13053.pdf
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    References listed on IDEAS

    as
    1. Michele Piccione & Ariel Rubinstein, 2007. "Equilibrium in the Jungle," Economic Journal, Royal Economic Society, vol. 117(522), pages 883-896, July.
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    Cited by:

    1. Soldatos, Gerasimos T., 2015. "Peacemaking and Peacebuilding through Opponent Non-Economic and Economic Homogenization," MPRA Paper 67482, University Library of Munich, Germany.

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    More about this item

    Keywords

    jungle economy; withholding; coercion; power;
    All these keywords.

    JEL classification:

    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • P52 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

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