Nonexistence of Constrained Efficient Equilibria when Markets are Incomplete

Egbert Dierker, Hildegard Dierker and Birgit Grodal
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Hildegard Dierker: University of Vienna

No 2000-07, CIE Discussion Papers from University of Copenhagen. Department of Economics. Centre for Industrial Economics

Abstract: We consider economies with incomplete markets, production, an a given distribution of initial endowments. The main purpose of the paper is to present a robust example of an economy with only one firm and one good per state in which no production decision entails a constrained efficient outcome. In particular, the unique Drèze equilibrium is dominated by every other production decision.

Keywords: incomplete markets with production; constraint efficiency; Drèze equilibria (search for similar items in EconPapers)
JEL-codes: D21 D52 G1 L2 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2000-10
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Citations: View citations in EconPapers (2)

Published in: Econometrica. May 2002; 70(3): 1245-51

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Persistent link: https://EconPapers.repec.org/RePEc:kud:kuieci:2000-07

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