 Efficiency and prices in economies of overlapping generationsJournal of Economic Theory, 2008, vol. 141, issue 1, 200-224 Abstract: In a general economy of overlapping generations, I introduce a notion of uniform inefficiency, corresponding to the occurrence of a Pareto improvement with a small uniform destruction of resources [G. Debreu, The coefficient of resource utilization, Econometrica 19 (1951) 273-292]. I provide a necessary and sufficient condition for uniform inefficiency in terms of prices at a competitive equilibrium: an allocation is uniformly inefficient if and only if the relative price of the aggregate endowment in a given period into the aggregate endowment up to that period does not vanish over periods of trade, a sort of Modified Cass Criterion [D. Cass, On capital overaccumulation in the aggregative neoclassical model of economic growth: a complete characterization, J. Econ. Theory 4 (1972) 200-223]. Minimal assumptions on fundamentals are needed for such a complete characterization. Furthermore, proofs reduce to simple and short direct arguments. Finally, I verify that uniform inefficiency is preserved under perturbations, a property that might fail for the canonical notion of inefficiency. Remarkably, an allocation is uniformly inefficient if and only if a non-vanishing redistribution, like a social security mechanism, is welfare improving. Date: 2008 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:141:y:2008:i:1:p:200-224 Access Statistics for this article Journal of Economic Theory is currently edited by A. Lizzeri and K. Shell More articles in Journal of Economic Theory from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.