Efficiency and equity in a socially-embedded economy

Marc Fleurbaey (), Ravi Kanbur and Dennis Snower
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Marc Fleurbaey: PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Dennis Snower: Global Solutions Initiative, INET Oxford - Institute for New Economic Thinking at the Oxford Martin School, UCL - University College of London [London], Brookings Institution

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Abstract: A model that only focuses on economic relations, and in which efficiency and equity are defined in terms of resource allocation may miss an important part of the picture. We propose a canonical extension of the standard general equilibrium model that embeds economic activities in a larger game of social interactions. Such a model combines general equilibrium effects with social multiplier effects and considerably enriches the analysis of efficiency and equity. Efficiency involves coordination between economic and social interactions, may depend on social norms, and may strongly interact with the distribution of resources. Equity can be defined in a comprehensive, socioeconomic way, and a decomposition into an economic and a social component is possible.

Keywords: Equilibrium; Social interactions; Efficiency; Equity; Externalities (search for similar items in EconPapers)
Date: 2024-01
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Published in Economic Theory, 2024, ⟨10.1007/s00199-023-01546-5⟩

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Working Paper: Efficiency and equity in a socially-embedded economy (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-04622449

DOI: 10.1007/s00199-023-01546-5

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