Nonexistence of constrained Efficient Equilibria when Markets are Incomplete
We consider economies with incomplete markets, production, and a given distribution of initial endowments. The main purpose of the paper to present a robust example of an econmy with only one firm and one good per state in which no production dicision entails a constrained efficient outcome. In particular, the unique Dréze equilibrium is dominated by every other production decision.
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"Incomplete Markets and the Firm,"
Vienna Economics Papers
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