Short sales, destruction of resources, welfare

Nikolaos Kokonas and Herakles Polemarchakis

Journal of Mathematical Economics, 2016, vol. 67, issue C, 120-124

Abstract: A reduction in the output of productive assets (trees) in some contingencies may expand the range of risks spanned by the payoffs of assets and allow for better risk sharing; which 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 support a Pareto superior allocation.

Keywords: Short sales; Destruction; Welfare (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:mateco:v:67:y:2016:i:c:p:120-124

DOI: 10.1016/j.jmateco.2016.09.006

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