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On voluntary and efficient allocations
Author(s) -
Ünveren Burak
Publication year - 2015
Publication title -
international journal of economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 11
eISSN - 1742-7363
pISSN - 1742-7355
DOI - 10.1111/ijet.12064
Subject(s) - disequilibrium , inefficiency , economics , corollary , equivalence (formal languages) , pareto principle , mathematical economics , generalization , microeconomics , general equilibrium theory , clearing , mathematics , finance , discrete mathematics , pure mathematics , ophthalmology , medicine , mathematical analysis , operations management
A set of sufficiency conditions is presented for Walrasian equilibrium to be equivalent to voluntary and efficient allocations. An important corollary of this equivalence is that voluntary trade in non‐clearing markets, which is omnipresent in all market economies, is inefficient. Moreover, our assumptions generalize all the results on the Pareto‐efficiency properties of disequilibrium. This generalization also shows that the inefficiency of disequilibrium is germane to the existence of Walrasian equilibrium.