Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/68517
Authors: 
Dierker, Egbert
Year of Publication: 
2012
Series/Report no.: 
Economics Series, Institute for Advanced Studies 290
Abstract: 
The purpose of this paper is to explore how the concept of a Drèze equilibrium can be extended to multiperiod production economies with incomplete markets. Constrained efficiency cannot serve as a basis for such an extension because multiperiod models tend to violate even weak constrained efficiency requirements. We show by means of examples how the difficulties that arise in the case of sequential trade can be taken into account. Finally, we employ the concept of minimal efficiency, which has been introduced by Dierker et al. (2005) in a two-period model, to derive a natural extension of the Drèze rule. This is possible because minimal efficiency relies on a planner who can choose the production plan but who cannot interfere with future consumption otherwise.
Subjects: 
incomplete markets with production
the objective of a firm
Drèze equilibria with sequential trade
efficiency and social welfare
JEL: 
D21
D52
D61
Document Type: 
Working Paper

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