Location of Repository

History : sunk cost or widespread externality? : second Arcelli lecture at the University of Piacenza, April 2007

By Peter J. Hammond

Abstract

In an intertemporal Arrow-Debreu economy with a continuum of agents, suppose that the auctioneer sets prices while the government institutes optimal lump-sum transfers period by period. An earlier paper showed how subgame imperfections arise because agents understand how their current decisions such as those determining investment will influence future lump-sum transfers. This observation undermines the second efficiency theorem of welfare economics and makes "history" a widespread externality. A two-period model is used to investigate the constrained efficiency properties of different kinds of equilibrium. Possibilities for remedial policy are also discussed

Topics: HB
Publisher: University of Warwick, Department of Economics
OAI identifier: oai:wrap.warwick.ac.uk:8

Suggested articles

Preview

Citations

  1. (1943). A la Recherche d'une Discipline Economique; second edition published as Trait e d'Economie Pure (Paris: Ateliers Industria; and Imprimerie Nationale).
  2. (1971). A Non-cooperative Equilibrium for Supergames" doi
  3. (1991). A Simple Model of Endogenous Tax Reform" doi
  4. (1973). A Simple Model of Imperfect Competition, where 4 Are Few and 6 Are Many" doi
  5. (1991). Adjustment, Compensation and Factor Mobility in Integrated Markets"
  6. (1951). An Extension of the Basic Theorems of Classical Welfare Economics"
  7. (1953). Capital Accumulation and Ecient Allocation of Resources"; and \Ecient Capital Accumulation: A Corrigendum" doi
  8. (1975). Charity: Altruism or Cooperative Egoism?"
  9. (2007). Competitive Market Mechanisms as Social Choice Procedures" doi
  10. (1968). Consistent Planning" doi
  11. (1989). Continuum Economies with Finite Coalitions: Core, Equilibrium, and Widespread Externalities" doi
  12. (1974). Core and Equilibria of a Large Economy (Princeton: doi
  13. (1990). Disadvantageous Oil Taris and Dynamic Consistency"
  14. (1987). Discretionary Trade Policy and Excessive Protection"
  15. (1980). Dynamic Inconsistency, Cooperation, and the Benevolent Dissembling Government" doi
  16. (1987). Expenditure Taxes, Income Taxes, and Time Inconsistency" doi
  17. (1947). Foundations of Economic Analysis doi
  18. (1995). Four Characterizations of Constrained Pareto Eciency in Continuum Economies with Widespread Externalities" doi
  19. (1999). History as a Widespread Externality in Some Arrow{Debreu Market Games" doi
  20. (1908). Il ministero della produzione nello stato colletivista"
  21. (1993). Intertemporal Consistency Issues in Depletable Resources" doi
  22. (1953). La g en eralisation des th eories de l' equilibre economique et du rendement social au cas du risque" doi
  23. (1953). Le r^ ole des valeurs boursi eres pour la r epartition la meilleure des risques"
  24. (1906). Manuale d'economia politica (Milan: Societ a Editrice Libraria; revised and translated as Manuel d' economie politique (Paris: Giard et Bri ere).
  25. (1956). Myopia and Inconsistency in Dynamic Utility Maximization" doi
  26. (1971). On the Existence and Optimality of Competitive Equilibrium for a Slave Economy" doi
  27. (1992). On the Impossibility of Perfect Capital Markets"
  28. (2004). Pareto Gains from Trade: A Dynamic Counterexample" doi
  29. (1975). Re-examination of the Perfectness Concept for Equilibrium Points of Extensive Games" doi
  30. (1985). Redistributive Taxation in a Simple Perfect Foresight Model" doi
  31. (1977). Rules Rather than Discretion: The Inconsistency of Optimal Plans" doi
  32. (1968). Second-Best National Saving and Game-Equilibrium Growth" doi
  33. (1987). Social Contracts as Assets: A Possible Solution to the Time-Consistency Problem" doi
  34. (1965). Spieltheoretische Behandlung eines Oligopolmodells mit Nachfragetr agheit" Zeitschrift f ur die gesamte Staatswissenschaft 121: 301{324 and 667{689.
  35. (1960). Strategy of Con ict
  36. (1989). The Core of a Continuum Economy with Widespread Externalities and Finite Coalitions: From Finite to Continuum Economies" doi
  37. (1986). The Core of a Game with a Continuum of Players and Finite Coalitions: The Model and Some Results" doi
  38. (1998). The Eciency Theorems and Market Failure"
  39. (1986). The Eect of Distributive Goals on the Time Inconsistency of Optimal Taxes" doi
  40. (1942). The Foundations of Welfare Economics" doi
  41. (1975). The Indeterminacy of Game-Equilibrium Growth" doi
  42. (1907). The Rate of Interest: Its Nature, Determination, and Relation to Economic Phonomena doi
  43. (1930). The Theory of Interest (New Haven:
  44. (1987). The Welfare Cost of Factor Taxation in a Perfect Foresight Model" doi
  45. (1959). Theory of Value: An Axiomatic Analysis of Economic Equilibrium doi
  46. (1969). Theory of Voting (New Haven: doi
  47. (1988). Time Consistency and Optimal Policy Design" Federal Reserve Bank of Minneapolis:
  48. (1986). Time-Inconsistency of Benevolent Government Economies" doi
  49. (1954). Valuation Equilibrium and Pareto Optimum" doi
  50. (1995). Walrasian Equilibrium without Survival: Existence, Eciency, and Remedial Policy"

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.