Constrained inefficiency in GEI: A geometric argument

Mario Tirelli ()

Journal of Mathematical Economics, 2008, vol. 44, issue 11, 1197-1214

Abstract: In this paper we use global analysis to study the welfare properties of general equilibrium economies with incomplete markets (GEI). Our main result is to show that constrained Pareto optimal equilibria are contained in a submanifold of the equilibrium set. This result is explicitly derived for economies with real assets and fixed aggregate resources, of which real numéraire assets are a special case. As a by product of our analysis, we propose an original global parametrization of the equilibrium set that generalizes to incomplete markets the classical one, first, proposed by Lange [Lange, O., 1942. The foundations of welfare economics. Econometrica 10, 215-228].

Keywords: General; equilibrium; Incomplete; markets; Optimality; Global; analysis (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:mateco:v:44:y:2008:i:11:p:1197-1214

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