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| Author: | Makowski, L. Ostray, J. |
| Title: | Appropriation and efficiency: a revision of the first theorem of welfare economics |
| Journal: | American Economic Review
1995 : SEP, VOL. 85:4, p. 808-827 |
| Index terms: | ECONOMICS WELFARE EFFICIENCY |
| Language: | eng |
| Abstract: | The First Theorem of Welfare Economics rests on the assumption that individuals have neither price-making nor market-making capacities. The revision emphasizes two keys for market efficiency: (1) the need to align private rewards with social contributions - called full appropriation, and (2) the need for an assumption to counter the possibility of coordination failures in the choice of produced commodities - called noncomplementarity. The authors also emphasize that information about prices of unmarked commodities involves decentralized knowledge available only to product innovators. |
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