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Nonexistence of Constrained Efficient Equilibria When Markets are Incomplete
Author(s) -
Dierker Egbert,
Dierker Hildegard,
Grodal Birgit
Publication year - 2002
Publication title -
econometrica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 16.7
H-Index - 199
eISSN - 1468-0262
pISSN - 0012-9682
DOI - 10.1111/1468-0262.00326
Subject(s) - citation , sociology , library science , mathematical economics , computer science , mathematics
We consider economies with incomplete markets, production, an a given distribution of initial endowments. The main purpose of the paper is to present a robust example of an economy with only one firm and one good per state in which no production decision entails a constrained efficient outcome. In particular, the unique Dreze equilibrium is dominated by every other production decision.