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When markets never fail : Reciprocal aggregation and the duality between persons and groups
| Content Provider | Semantic Scholar |
|---|---|
| Author | Crès, Hervé Tvede, Mich |
| Copyright Year | 2014 |
| Abstract | When markets fail, at equilibrium shareholders typically disagree on how to run the firms, and genuine problems of social choice appear. Hence the necessity for an aggregation mechanism. This paper assumes aggregation simultaneously at the collective and individual levels, proposing a general equilibrium notion of reciprocal aggregation. The central principle the latter builds on is the unanimity principle, an admitedly weak requirement for aggregation mechanisms. Applied to the two leading cases of externalities in production and incomplete financial markets, we show how the strong unanimity principle restores Pareto optimality, even in case of severe market failures. ∗New York University, Abu Dhabi. herve.cres@nyu.edu †University of Newcastle |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | http://econ.as.nyu.edu/docs/IO/35917/aggregation_duality_may.pdf |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
