Appropriation and Efficiency: A Revision of the First Theorem of Welfare Economics
The First Theorem of Welfare Economics rests on the assumption that individuals have neither price-making nor market-making capacities. We offer a revision in which individuals have such capacities. The revision emphasizes two keys for market efficiency: (i) the need to align private rewards with so...
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| Veröffentlicht in: | The American economic review 1995-09, Vol.85 (4), p.808-827 |
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| creator | Makowski, Louis Ostroy, Joseph M |
| description | The First Theorem of Welfare Economics rests on the assumption that individuals have neither price-making nor market-making capacities. We offer a revision in which individuals have such capacities. The revision emphasizes two keys for market efficiency: (i) the need to align private rewards with social contributions--called full appropriation, and (ii) the need for an assumption to counter the possibility of coordination failures in the choice of produced commodities--called noncomplementarily. We also emphasize that information about prices of unmarketed commodities involves decentralized knowledge available only to product innovators and that pecuniary externalities are important potential sources of market failure. |
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nor market-making capacities. We offer a revision in which individuals have such capacities. The revision emphasizes two keys for market efficiency: (i) the need to align private rewards with social contributions--called full appropriation, and (ii) the need for an assumption to counter the possibility of coordination failures in the choice of produced commodities--called noncomplementarily. We also emphasize that information about prices of unmarketed commodities involves decentralized knowledge available only to product innovators and that pecuniary externalities are important potential sources of market failure.</abstract><cop>Menasha, Wis</cop><pub>American Economic Association</pub><tpages>20</tpages></addata></record> |
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| identifier | ISSN: 0002-8282 |
| ispartof | The American economic review, 1995-09, Vol.85 (4), p.808-827 |
| issn | 0002-8282 1944-7981 |
| language | eng |
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| source | Business Source Complete; Periodicals Index Online; Jstor Complete Legacy |
| subjects | Commodities Competition Computer software Economic efficiency Economic models Economic theory Economics Efficiency Efficient markets Externality Failure Innovations Logical theorems Marginal products Market efficiency Market failure Market prices Occupations Pareto optimum Price efficiency Prices Pricing policies Product innovation Revisions Studies Trade Welfare economics |
| title | Appropriation and Efficiency: A Revision of the First Theorem of Welfare Economics |
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