On voluntary and efficient allocations


Unveren B.

INTERNATIONAL JOURNAL OF ECONOMIC THEORY, vol.11, no.2, 2015 (Journal Indexed in SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 11 Issue: 2
  • Publication Date: 2015
  • Doi Number: 10.1111/ijet.12064
  • Title of Journal : INTERNATIONAL JOURNAL OF ECONOMIC THEORY

Abstract

A set of sufficiency conditions is presented for Walrasian equilibrium to be equivalent to voluntary and efficient allocations. An important corollary of this equivalence is that voluntary trade in non-clearing markets, which is omnipresent in all market economies, is inefficient. Moreover, our assumptions generalize all the results on the Pareto-efficiency properties of disequilibrium. This generalization also shows that the inefficiency of disequilibrium is germane to the existence of Walrasian equilibrium.