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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," CRETA Online Discussion Paper Series 12, Centre for Research in Economic Theory and its Applications CRETA.
    • Handle: RePEc:wrk:wcreta:12
    as

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    File URL: https://warwick.ac.uk/fac/soc/economics/research/centres/creta/papers/manage/12-short_sales_destruction_of_resources_welfare.pdf
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    References listed on IDEAS

    as
    1. Geanakoplos, J. & Polemarchakis, H., 1985. "Existence,regularity, and constrained suboptimality of competitive allocations when the asset market is incomplete," LIDAM Discussion Papers CORE 1985037, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    2. Donsimoni, M. -P. & Polemarchakis, H. M., 1994. "Redistribution and welfare," Journal of Mathematical Economics, Elsevier, vol. 23(3), pages 235-242, May.
    3. Aumann, R. J. & Peleg, B., 1974. "A note on Gale's example," Journal of Mathematical Economics, Elsevier, vol. 1(2), pages 209-211, August.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    short sales ; destruction ; welfare JEL classification numbers: D52 ; D61;
    All these keywords.

    JEL classification:

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

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