Wealth Inequality, Wealth Constraints and Economic Performance

Pranab Bardhan, Samuel Bowles and Herbert Gintis

Department of Economics, Working Paper Series from Department of Economics, Institute for Business and Economic Research, UC Berkeley

Abstract: When asymmetry or non-verifiability of information, or non-excludability of users, makes contracts incomplete or unenforceable, and where for these and other reasons there are impediments to efficient bargaining, we show that private contracting will not generally assign the control of assets and the residual claimancy over income streams of projects to achieve socially efficient outcomes, suggesting that the policy relevance of the widely accepted "efficiency-equity tradeoff" should be seriously reconsidered. We illustrate these ideas with reference to misallocations in land, labor and credit markets. We also explore the consequences of redistributive policies for risk-taking and risk exposure when non-wealthy agents are risk-averse and for resolving collective action problems inherent in the provision of local public goods in the context of commons.

Keywords: inequality; agency problems; cooperation; team production; risk-aversion (search for similar items in EconPapers)
Date: 1999-12-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
https://www.escholarship.org/uc/item/3bh899fh.pdf;origin=repeccitec (application/pdf)

Related works:
Chapter: Wealth inequality, wealth constraints and economic performance (2000)
Working Paper: Wealth Inequality, Wealth Constraints and Economic Performance (1999)
Working Paper: Wealth Inequality, Wealth Constraints and Economic Performance (1998)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cdl:econwp:qt3bh899fh

Access Statistics for this paper

More papers in Department of Economics, Working Paper Series from Department of Economics, Institute for Business and Economic Research, UC Berkeley Contact information at EDIRC.
Bibliographic data for series maintained by Lisa Schiff ().