Does market coordination lead to justice or to strict efficiency in Social Choice and Individual Values?

Irène Berthonnet () and Vincent Desreumaux ()

Cahiers d’économie politique / Papers in Political Economy, 2014, issue 66, 95-126

Abstract: The paper tries to clarify the status of the market in Social Choice and Individual Values. It shows how Arrow at first intended to propose a third theorem of welfare economics (Feldman [1991]), which would show that the market achieves not only Pareto-optimality, but also equitable social allocations. The impossibility theorem proves this is impossible. Arrow’s solution to impossibility is interpreted here as a further limitation of the market’s objectives. At the end of the book, the market is presented as a technical mechanism that guarantees economic efficiency, if it doesn’t take individual values into consideration.

Keywords: Impossibility theorem; welfare economics; values; social welfare function; economic efficiency. (search for similar items in EconPapers)
JEL-codes: B20 D60 D71 (search for similar items in EconPapers)
Date: 2014
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