Gift Equilibria and Pareto Optimality Reconsidered

Goldman (Gift equilibria and Pareto optimality, J. Econ. Theory 18, 1978, 368-370) demonstrated that the Second Welfare Theorem generally fails to hold in economies in which benevolent agents are permitted to make gifts. In this brief note, we point out that for the class of economies considered by...

Full description

Saved in:
Bibliographic Details
Published in:Journal of economic theory 1994-10, Vol.64 (1), p.298-300
Main Author: Kranich, Laurence
Format: Article
Language:English
Subjects:
Economic theory
Equilibrium
Mathematical models
Pareto optimum
Studies
Theorems
Welfare
Welfare economics
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Goldman (Gift equilibria and Pareto optimality, J. Econ. Theory 18, 1978, 368-370) demonstrated that the Second Welfare Theorem generally fails to hold in economies in which benevolent agents are permitted to make gifts. In this brief note, we point out that for the class of economies considered by Goldman, symmetry and a slight bias in favor of one′s own consumption restore the Second Welfare Theorem. Journal of Economic Literature Classification Numbers: D62, D61, D50.
ISSN:0022-0531
1095-7235
DOI:10.1006/jeth.1994.1070