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History : sunk cost or widespread externality? : second Arcelli lecture at the University of Piacenza, April 2007
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Hammond, Peter J. (2007) History : sunk cost or widespread externality? : second Arcelli lecture at the University of Piacenza, April 2007. [Coventry]: University of Warwick, Department of Economics. (Warwick economic research papers).
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Official URL: http://www2.warwick.ac.uk/fac/soc/economics/resear...
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.
Item Type: | Report | ||||
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Alternative Title: | Arcelli lecture (2007) | ||||
Subjects: | H Social Sciences > HB Economic Theory | ||||
Divisions: | Faculty of Social Sciences > Economics | ||||
Library of Congress Subject Headings (LCSH): | Efficiency wage theory, Welfare economics, Equilibrium (Economics) | ||||
Series Name: | Warwick economic research papers | ||||
Publisher: | University of Warwick, Department of Economics | ||||
Place of Publication: | [Coventry] | ||||
Official Date: | July 2007 | ||||
Dates: |
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Number: | No.808 | ||||
Number of Pages: | 25 | ||||
Status: | Not Peer Reviewed | ||||
Access rights to Published version: | Open Access (Creative Commons) | ||||
Available As: | Hammond, P.J. (2007) History : sunk cost or widespread externality? Rivista Internazionale di Scienze Sociali, No.2, pp.161–185. |
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