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Strict fairness of equilibria in asymmetric information economies and mixed markets

Author

Listed:
  • Chiara Donnini

    (Università degli Studi di Napoli Parthenope)

  • Marialaura Pesce

    (Università degli Studi di Napoli Federico II and CSEF)

Abstract

We investigate the fairness property of equal-division competitive market equilibria (CME) in asymmetric information economies with a space of agents that may contain non-negligible (large) traders. We first propose an extension to our framework of the notion of strict fairness due to Zhou (J Econ Theory 57:158–175, 1992). We prove that once agents are asymmetrically informed, any equal-division CME allocation is strictly fair, but a strictly fair allocation might not be supported by an equilibrium price. Then, we investigate the role of large traders and we provide two sufficient conditions under which, in the case of complete information economies, a redistribution of resources is strictly fair if and only if it results from a competitive mechanism.

Suggested Citation

  • Chiara Donnini & Marialaura Pesce, 2020. "Strict fairness of equilibria in asymmetric information economies and mixed markets," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 69(1), pages 107-124, February.
    • Handle: RePEc:spr:joecth:v:69:y:2020:i:1:d:10.1007_s00199-018-1158-0
    DOI: 10.1007/s00199-018-1158-0
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    References listed on IDEAS

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    Cited by:

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    3. Chiara Donnini & Armando Sacco, 2024. "Social equity in international environmental agreements," Journal of Global Optimization, Springer, vol. 90(1), pages 261-291, September.
    4. Cato, Susumu, 2021. "Preference aggregation and atoms in measures," Journal of Mathematical Economics, Elsevier, vol. 94(C).

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    More about this item

    Keywords

    Strict fairness; Envy-freeness; Efficiency; Asymmetric information; Mixed markets;
    All these keywords.

    JEL classification:

    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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