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Short sales, destruction of resources, welfare

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  • Kokonas, Nikolaos
  • Polemarchakis, Herakles

Abstract

A reduction in the output of productive assets (trees) in some contingencies may expand the range of risks spanned by the payoffs of assets and allow for better risk sharing; which may compensate for the loss of output and support a Pareto superior allocation. Surprisingly, if short sales of assets are not allowed, improved risk sharing that results from the destruction of output does not suffice to support a Pareto superior allocation.

Suggested Citation

  • Kokonas, Nikolaos & Polemarchakis, Herakles, 2016. "Short sales, destruction of resources, welfare," Journal of Mathematical Economics, Elsevier, vol. 67(C), pages 120-124.
    • Handle: RePEc:eee:mateco:v:67:y:2016:i:c:p:120-124
    DOI: 10.1016/j.jmateco.2016.09.006
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    References listed on IDEAS

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    Cited by:

    1. Giannikos Christos & Gousgounis Eleni, 2018. "Short Sale Constraints, Correlation and Market Efficiency," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 18(2), pages 1-18, July.

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