Wealth Inequality, Wealth Constraints and Economic Performance

Pranab K. Bardhan, Samuel Bowles and Herbert Gintis ()
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Samuel Bowles: University of Massachusetts, Amherst

Microeconomics from EconWPA

Abstract: When asymmetry or non-verifiability of information, or non- excludability of users, makes contracts incomplete or unenforceable, and where for these and other reasons there are impediments to efficient bargaining, we show that private contracting will not generally assign the control of assets and the residual claimancy over income streams of projects to achieve socially efficient outcomes, suggesting that the policy relevance of the widely accepted "efficiency-equity tradeoff" should be seriously reconsidered. We illustrate these ideas with reference to misallocations in land, labor and credit markets. We also explore the consequences of redistributive policies for risk-taking and risk exposure when non-wealthy agents are risk-averse and for resolving collective action problems inherent in the provision of local public goods in the context of commons.

JEL-codes: D2 D3 D6 D74 J5 O1 P1 P5 Q2 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm, nep-mic, nep-pke and nep-pub
Date: 1998-06-05
Note: 76 pages
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Related works:
Chapter: Wealth inequality, wealth constraints and economic performance (2000)
Working Paper: Wealth Inequality, Wealth Constraints and Economic Performance (1998)
Working Paper: Wealth Inequality, Wealth Constraints and Economic Performance (1999)
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpmi:9805002

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