The Second Welfare Theorem of Classical Welfare Economics

Hurwicz, Leonid
Richter, Marcel K.
2001-08
Thumbnail Image

View/Download File

2001-312.pdf (1.21 MB)

Persistent link to this item

https://hdl.handle.net/11299/55879
Statistics
View Statistics

Journal Title

Journal ISSN

Volume Title

Title

The Second Welfare Theorem of Classical Welfare Economics

Authors

Published Date

2001-08

Publisher

Center for Economic Research, Department of Economics, University of Minnesota

Type

Working Paper

Abstract

We extend the Second Fundamental Theorem of Welfare Economics in several directions. For pure exchange economies, we drop all insatiability requirements on preferences. For economies with production, we use a concept of directional optimality to provide necessary and sufficient conditions for a given allocation to be competitive. This enables us to show, for example, that not all consumers need to be locally nonsatiated, if the economy is "connected." (An example due to Stanley Reiter shows that such extra conditions are unavoidable.) We use weak assumptions on feasibility sets, allowing, but not requiring, short sales and a very general form of disposability. We do not require that preferences be reflexive, transitive, total, or negatively transitive; and we replace full continuity of preferences by a semicontinuity condition for strict preferences. This provides decentralization results extending some of Arrow's original results [1], as well as those in Arrow and Hahn [2, Theorem 4, pp. 93-94] Debreu [6, Theorem 6.4, p. 95], [4, p. 281], and elsewhere.

Keywords

Description

Related to

Replaces

License

Collections

Center for Economic Research Discussion Papers

Series/Report Number

Discussion Paper
 312

Funding information

Isbn identifier

Doi identifier

Previously Published Citation

Hurwicz, L. and Richter, M.K., (2001), "The Second Welfare Theorem of Classical Welfare Economics", Discussion Paper No. 312, Center for Economic Research, Department of Economics, University of Minnesota.

Suggested citation

Hurwicz, Leonid; Richter, Marcel K.. (2001). The Second Welfare Theorem of Classical Welfare Economics. Retrieved from the University Digital Conservancy, https://hdl.handle.net/11299/55879.

Content distributed via the University Digital Conservancy may be subject to additional license and use restrictions applied by the depositor. By using these files, users agree to the Terms of Use. Materials in the UDC may contain content that is disturbing and/or harmful. For more information, please see our statement on harmful content in digital repositories.