Pareto Optimality Of Equilibrium Research Articles

Undominatedness of Equilibria in a Mixed Economy of Arrow—Debreu Type

We consider a model of economy with two markets for each product: one—state and the other—competitive. Moreover, both markets coexist in the same economic space allowing free movement of goods and means of payment. In particular, it is assumed that the surplus of products purchased at fixed state prices can be sold at free prices of the competitive market. The important feature of the model is that the manufacturing activity is taken into account both in the state and in the competitive market. While most literature on mixed economies is devoted to the issues of existence and Pareto optimality of equilibria, the focus of the present paper is on analyzing their coalition stability. We continue studying the fuzzy cores of mixed economic models of Arrow—Debreu type which was started earlier for the case of high free market prices. New conditions are established for the coincidence of the sets of undominated and equilibrium allocations, covering the cases of low equilibrium prices for some of the products.

Monopolistic Competition in a Large Economy

Fort a small economy, the equilibrium under monopolistic competition may not be Pareto optimal. The paper deals with the condition for the existence and Pareto optimality of equilibrium under monopolistic competition in a large economy with differentiated products.

Equilibrium and efficiency with property rights and local consumption externalities

There is no mechanism that guarantees existence and Pareto optimality of equilibrium in all situations if each individual has limited property rights and a utility function that depends upon his neighbour's consumption. This is true under virtually any assumption about coalition formation. Therefore, Sen's paradox of the Paretian liberal is confirmed in an economic exchange setting with limited externalitities, and Coase's conjecture on the efficiency of bargaining with complete information is denied.