Short sales, destruction of resources, welfare

Nikos Kokonas and Herakles Polemarhakis

No 269723, Economic Research Papers from University of Warwick - Department of Economics

Abstract: A reduction in the output of productive assets (trees) in some states of the world can expand the span of payoffs of assets; and, improved risk sharing may compensate for the loss of output and support a Pareto superior allocation. Surprisingly, if short sales of assets are not allowed, improved risk sharing that results from the destruction of output does not suffice to induce a Pareto superior allocation.

Keywords: Financial; Economics (search for similar items in EconPapers)
Pages: 10
Date: 2015-12-22
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uwarer:269723

DOI: 10.22004/ag.econ.269723

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