Beyond the Horizon: Attainability of Pareto Optimality when the Indefinite Future Matters

Simon P. Eveson and Jacco Thijssen

Discussion Papers from Department of Economics, University of York

Abstract: In this paper we study the attainability of Pareto optimal allocations in infinitedimensional exchange economies where agents have utility functions that value consumption at infinity. Such a model can be used to model economic settings where the indefinite future matters. The commodity space that we use is the space of all convergent sequences. We derive a necessary and sufficient condition for the attainability of the Pareto optimal allocations, which states that, for each pair of consumers, the ratio of the weights they place on utility in finite time periods should converge to the ratio of their utility weights at infinity. This, in turn, implies that efficiency can only be attained if consumers’ valuations of time are very similar. We extend the model to include consumers with Rawlsian preferences and find that this does not change the attainability of Pareto optimal allocations.

Keywords: Infinite horizon exchange economy; Pareto optimality; non-discounting preferences (search for similar items in EconPapers)
JEL-codes: D51 (search for similar items in EconPapers)
Date: 2012-10
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.york.ac.uk/media/economics/documents/discussionpapers/2012/1229.pdf Main text (application/pdf)

Related works:
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:yor:yorken:12/29

Access Statistics for this paper

More papers in Discussion Papers from Department of Economics, University of York Department of Economics and Related Studies, University of York, York, YO10 5DD, United Kingdom. Contact information at EDIRC.
Bibliographic data for series maintained by Paul Hodgson ().