When Inefficiency Begets Efficiency

Hans Gersbach and Hans Haller
Additional contact information
Hans Haller: Virginia Polytechnic Institute and State University

No 03-11, Discussion Papers from University of Copenhagen. Department of Economics

Abstract: Collective consumption decisions taken by the members of a household may prove inefficient. The impact of such inefficient household decisions on market performance is investigated. At one extreme, market efficiency can occur even when household decisions are inefficient, namely when household inefficiencies are merely due to inefficient net trades with the market. At the other extreme, market efficiency is bound to fail, if household inefficiencies are solely caused by an inefficient distribution of a household's aggregate consumption to its individual members. This leads us to consider competitive forces as a disciplinary device for households. When households compete for both resources and members then household stability requires efficient or not too inefficient internal distribution.

Pages: 31 pages
Date: 2003-02
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.econ.ku.dk/english/research/publications/wp/2003/0311.pdf/ (application/pdf)

Related works:
Journal Article: When inefficiency begets efficiency (2005)
Working Paper: When Inefficiency Begets Efficiency (2004)
Working Paper: When Inefficiency Begets Efficiency (2003)
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:kud:kuiedp:0311

Access Statistics for this paper

More papers in Discussion Papers from University of Copenhagen. Department of Economics Oester Farimagsgade 5, Building 26, DK-1353 Copenhagen K., Denmark. Contact information at EDIRC.
Bibliographic data for series maintained by Thomas Hoffmann ().