Incomplete Markets and the Firm

In this paper we analyze the welfare properties of the set of Drèze equilibria for economies with incomplete markets and firms. The well known fact that a Drèze equilibrium need not be constrained Pareto optimal is often attributed to a lack of coordination between firms. We show that there are economies with a single firm in which no Drèze equilibrium is constrained Pareto efficient. Even a unique Drèze equilibrium need not be constrained Pareto efficient.

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Year of publication:	1999-03
Authors:	Dierker, Egbert ; Dierker, Hildegard ; Grodal, Birgit
Institutions:	Centre for Industrial Economics (CIE), Økonomisk Institut
Subject:	incomplete markets \| firms' objectives \| Drèze equilibria \| efficiency

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Series:	CIE Discussion Papers.
Type of publication:	Book / Working Paper
Notes:	Number 1999-05 28 pages
Classification:	D4 - Market Structure and Pricing ; D5 - General Equilibrium and Disequilibrium ; D6 - Welfare Economics ; L2 - Firm Objectives, Organization, and Behavior
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005543435