Does Dynamic Market Competition with Technological Innovation Leave No One Behind?: An Axiomatic Study in OLG Frameworks

Yongsheng Xu and Naoki Yoshihara

No 769, Discussion Paper Series from Institute of Economic Research, Hitotsubashi University

Abstract: The Hicksian optimism, a neoclassical economic creed, says that the consistent implementation of ‘Pareto-efficient policies’ sequentially would eventually improve the welfare of every individual from the initial position in the long run. In this paper, we formulate the Hicksian optimism as an axiom and then examine whether the market mechanism with the consistent application of technological progress policies can fulfill the Hicksian optimism. We show in a simple Overlapping Generations model that the market mechanism with technological progress unavoidably leaves some individuals behind. This negative result holds for a broad class of intertemporal resource allocation mechanisms.

Keywords: dynamic market competition with technological progress; Hicksian Optimism; Walrasian allocation rule; weak Pareto efficiency; individual rationality; overlapping generations economy (search for similar items in EconPapers)
JEL-codes: D30 D51 D60 O33 P10 P20 P40 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2025-06
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Persistent link: https://EconPapers.repec.org/RePEc:hit:hituec:769

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