How Efficiency/Equity Tradeoffs Resolve through Horizon Effects

The so-called efficiency/equity tradeoff emerges from the notion that competition is efficient and that the financial incentives spurring output do not consist with equity in the outcomes so achieved. Distributional equity is seen to conflict with the allocative efficiency of individuals seeking gai...

Full description

Saved in:
Bibliographic Details
Published in:Journal of economic issues 2005-06, Vol.39 (2), p.365-373
Main Author: Jennings, Frederic B.
Format: Article
Language:English
Subjects:
Analysis
Competition
Ecological competition
Ecological economics
Economic competition
Economic costs
Economic efficiency
Economic models
Economic policy
Economic theory
Efficiency
Equity
Financial markets
Horizontal integration
Increasing returns
Organizational theory
Social engineering
Studies
Tradeoffs
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:The so-called efficiency/equity tradeoff emerges from the notion that competition is efficient and that the financial incentives spurring output do not consist with equity in the outcomes so achieved. Distributional equity is seen to conflict with the allocative efficiency of individuals seeking gain within a competitive frame. But is competition truly efficient? The claim is seldom probed, despite its sundry flaws. Special exceptions to market "perfection" may be general laws. The underlying conditions of the case for competition need more attention than they get. The interdependence of social relations should be our first concern. Human associations in a myopic competitive world are rivalrous: substitution and tradeoffs serve as economic descriptions thereof. Economists' substitution assumptions show competition to be efficient: the opposition of wants is better resolved through bidding than force. Substitution depends substantially on diminishing returns, which only apply to short-term models with some input taken as fixed. But long-term production technology yields to increasing returns in cost.
ISSN:0021-3624
1946-326X
DOI:10.1080/00213624.2005.11506813