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Short Sales, Destruction of Resources, Welfare

Author

Listed:
  • Kokonas, Nikos

    (Department of Economics, University of Bath)

  • Polemarchakis, Herakles

    (Department of Economics, University of Warwick)

Abstract

A reduction in the output of productive assets (trees) in some states of the world can expand the span of payoffs of assets and, improved risk sharing may compensate for the loss of output and support a Pareto superior allocation. Surprisingly, if short sales of assets are not allowed, improved risk sharing that results from the destruction of output does not suffice to induce a Pareto superior allocation.

Suggested Citation

  • Kokonas, Nikos & Polemarchakis, Herakles, 2015. "Short Sales, Destruction of Resources, Welfare," The Warwick Economics Research Paper Series (TWERPS) 1102, University of Warwick, Department of Economics.
    • Handle: RePEc:wrk:warwec:1102
    as

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    File URL: https://warwick.ac.uk/fac/soc/economics/research/workingpapers/2015/twerp_1102_kokonas.pdf
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    References listed on IDEAS

    as
    1. Donsimoni, M. -P. & Polemarchakis, H. M., 1994. "Redistribution and welfare," Journal of Mathematical Economics, Elsevier, vol. 23(3), pages 235-242, May.
    2. Aumann, R. J. & Peleg, B., 1974. "A note on Gale's example," Journal of Mathematical Economics, Elsevier, vol. 1(2), pages 209-211, August.
    3. John Geanakoplos & Heracles M. Polemarchakis, 1985. "Existence, Regularity, and Constrained Suboptimality of Competitive Allocations When the Asset Market Is Incomplete," Cowles Foundation Discussion Papers 764, Cowles Foundation for Research in Economics, Yale University.
    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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