On the set of Pareto efficient allocations in economies with public goods

Dimitrios Diamantaras, Simon Wilkie

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4 Citations (Scopus)

Abstract

We examine the set of Pareto-efficient allocations in economies with public goods. We show that even if preferences are continuous and strongly monotonic, it need not coincide with the set of weakly efficient allocations. We then study topological properties of the Pareto set. We show that it is neither connected nor closed in allocation space. Furthermore, if the public goods are local, the image of the Pareto set in utility space need not be closed or connected. We provide two independent sufficient conditions for the closedness of the Pareto set. The results are directly applicable to private goods economies with joint production. Our results should be of interest for general equilibrium and mechanism design theory; where for example, the properties of the efficient set are important for proving the existence of an equilibrium and for the study of the properties of monotone-path social choice correspondences.

Original languageEnglish
Pages (from-to)371-379
Number of pages9
JournalEconomic Theory
Volume7
Issue number2
DOIs
Publication statusPublished - Jun 1996
Externally publishedYes

Keywords

  • public good
  • economic theory
  • general equilibrium
  • social choice
  • topological property

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