Changes in Social Welfare in an Intertemporal Economy
14 Pages Posted: 12 Sep 2011
Date Written: September 11, 2011
Abstract
General Equilibrium Theory (GE) scrutinizes the ability of markets to achieve efficient allocation of resources. Our main purpose is, in the framework to the GE to analyze, the possibility of design a mechanism enabling agents to make independent decisions compatible with social welfare. More precisely, we address the problem of the possibility of decentralization mechanism to sustain efficiency and social welfare at the same time. Specifically, introducing a social utility function, we argue on the possibility of improving the social welfare transferring resources between periods of the economy. This mechanism introduces a Rawlsian solution improving the welfare of the individuals worst positioned.
Keywords: Welfare, efficiency, decentralization
JEL Classification: D6, D7
Suggested Citation: Suggested Citation