IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/1304.html
   My bibliography  Save this paper

Pecuniary & Market Mediated Externalities: Towards a General Theory of the Welfare Economics & Economies with Imperfect Information & Incomplete Mrkts

Author

Listed:
  • Bruce C. Greenwald
  • Joseph E. Stiglitz

Abstract

This paper presents a simple but quite general framework for analyzing the impact of informational externalities. By identifying the traditional pecuniary effect of these externalities which nets out,the paper greatly simplifies the problem of determining when tax interventions can be Pareto improving. In some cases it also leads to simple tests, based on readily observable indicators of the efficacy of a particular tax policy. The framework of the paper is used to analyze adverse selection, signalling, moral hazard, incomplete contingent claim markets and queue rationing equilibria.

Suggested Citation

  • Bruce C. Greenwald & Joseph E. Stiglitz, 1984. "Pecuniary & Market Mediated Externalities: Towards a General Theory of the Welfare Economics & Economies with Imperfect Information & Incomplete Mrkts," NBER Working Papers 1304, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:1304
    Note: PE
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w1304.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Starrett, David A, 1980. "Measuring Externalities and Second Best Distortions in the Theory of Local Public Goods," Econometrica, Econometric Society, vol. 48(3), pages 627-642, April.
    2. Peter A. Diamond & Eric Maskin, 1979. "An Equilibrium Analysis of Search and Breach of Contract, I: Steady States," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 282-316, Spring.
    3. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 87(3), pages 355-374.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mathias Kifmann, 2010. "Indikationsspezifische Kosten-Nutzen-Bewertung auf Grundlage eines sozialen Gesundheitsindexes," Discussion Paper Series 310, Universitaet Augsburg, Institute for Economics.
    2. Runge, C. Ford, 1992. "Environmental Effects Of Trade In The Agricultural Sector: A Case Study," Working Papers 14449, University of Minnesota, Center for International Food and Agricultural Policy.
    3. Iregui, Ana Maria, 2005. "Decentralised provision of quasi-private goods: The case of Colombia," Economic Modelling, Elsevier, vol. 22(4), pages 683-706, July.
    4. Martin Luckert & Wiktor Adamowicz, 1993. "Empirical measures of factors affecting social rates of discount," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 3(1), pages 1-21, February.
    5. Richard O. Zerbe, 1998. "Is cost-benefit analysis legal? Three rules," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 17(3), pages 419-456.
    6. Bullock, D. S. & Salhofer, K., 1998. "Measuring the social costs of suboptimal combinations of policy instruments: A general framework and an example," Agricultural Economics, Blackwell, vol. 18(3), pages 249-259, May.
    7. Samuel Fankhauser & Richard Tol & DAVID Pearce, 1997. "The Aggregation of Climate Change Damages: a Welfare Theoretic Approach," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 10(3), pages 249-266, October.
    8. Horbulyk, Theodore M., 2000. "The social cost of labor in rural development: job creation benefits re-examined," Agricultural Economics, Blackwell, vol. 24(2), pages 199-208, January.
    9. Stiglitz, J.E., 1985. "Economics of information and the theory of economic development," Brazilian Review of Econometrics, Sociedade Brasileira de Econometria - SBE, vol. 5(1), April.
    10. Scarpa, Riccardo & Chilton, Susan M. & Hutchinson, W. George & Buongiorno, Joseph, 2000. "Valuing the recreational benefits from the creation of nature reserves in Irish forests," Ecological Economics, Elsevier, vol. 33(2), pages 237-250, May.
    11. Bernard Enjolras, 2004. "Individual action, institutions and social change: an approach in terms of convention," Cahiers de la Maison des Sciences Economiques r04052, Université Panthéon-Sorbonne (Paris 1).
    12. Olof Johansson-Stenman, 2000. "On the Value of Life in Rich and Poor Countries and Distributional Weights Beyond Utilitarianism," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 17(3), pages 299-310, November.
    13. Lisa C. SMITH, 1994. "Structural Adjustment And Welfare In Rural Africa: The Role Of Resource Control In Households," Staff Papers 368, University of Wisconsin Madison, AAE.
    14. Sardar M. N. Islam & Matthew F. Clarke, 2005. "The welfare economics of measuring sustainability: a new approach based on social choice theory and systems analysis," Sustainable Development, John Wiley & Sons, Ltd., vol. 13(5), pages 282-296.
    15. John Geanakoplos & Martin Shubik, 1989. "The Capital Asset Pricing Model as a General Equilibrium with Incomplete Markets," Cowles Foundation Discussion Papers 913, Cowles Foundation for Research in Economics, Yale University.
    16. Kristin Jakobsson & Andrew Dragun, 2001. "The Worth of a Possum: Valuing Species with the Contingent Valuation Method," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 19(3), pages 211-227, July.
    17. Daniel Bromley, 2004. "Reconsidering Environmental Policy: Prescriptive Consequentialism and Volitional Pragmatism," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 28(1), pages 73-99, May.
    18. Belli, Pedro, 1997. "The comparative advantage of government : a review," Policy Research Working Paper Series 1834, The World Bank.
    19. Angella, Namyenya, 2014. "Farmers' Willingness to Pay for Irrigation Water: The Case of Doho Rice Irrigation Scheme in Eastern Uganda," Research Theses 243462, Collaborative Masters Program in Agricultural and Applied Economics.
    20. Smart, Michael, 1999. "A simple proof of the efficiency of the poll tax," Journal of Public Economics, Elsevier, vol. 71(3), pages 459-465, March.
    21. Per-Olov Johansson, 1992. "Altruism in cost-benefit analysis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 2(6), pages 605-613, November.
    22. Vieira da Cunha, Paulo & Junho Pena, Maria Valeria, 1997. "The limits and merits of participation," Policy Research Working Paper Series 1838, The World Bank.
    23. Runge, C. Ford, 1993. "Trade, Pollution And Environmental Protection," Staff Papers 14025, University of Minnesota, Department of Applied Economics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kaplow, Louis & Shapiro, Carl, 2007. "Antitrust," Handbook of Law and Economics, in: A. Mitchell Polinsky & Steven Shavell (ed.), Handbook of Law and Economics, edition 1, volume 2, chapter 15, pages 1073-1225, Elsevier.
    2. Ferdinand Thies & Sören Wallbach & Michael Wessel & Markus Besler & Alexander Benlian, 2022. "Initial coin offerings and the cryptocurrency hype - the moderating role of exogenous and endogenous signals," Electronic Markets, Springer;IIM University of St. Gallen, vol. 32(3), pages 1691-1705, September.
    3. Anders Gustafsson, 2019. "Busy doing nothing: why politicians implement inefficient policies," Constitutional Political Economy, Springer, vol. 30(3), pages 282-299, September.
    4. Michael Waldman, 1990. "A Signalling Explanation for Seniority Based Promotions and Other Labor Market Puzzles," UCLA Economics Working Papers 599, UCLA Department of Economics.
    5. Stuth, Stefan & Schorlemmer, Julia & Hennig, Marina & Allmendinger, Jutta, 2014. "Freiwilliges Engagement: Ein Patentrezept für Wiedereinsteigerinnen?," Discussion Papers, Presidential Department P 2014-007, WZB Berlin Social Science Center.
    6. Jitender Singh, 2016. "Quality of Public Goods, Public Policy and Human Development: A State-wise Analysis," Indian Journal of Human Development, , vol. 10(2), pages 215-235, August.
    7. Nobuhiro Kiyotaki & Ricardo Lagos, 2007. "A Model of Job and Worker Flows," Journal of Political Economy, University of Chicago Press, vol. 115(5), pages 770-819, October.
    8. Thomas de Haan & Theo Offerman & Randolph Sloof, 2015. "Money Talks? An Experimental Investigation Of Cheap Talk And Burned Money," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 56(4), pages 1385-1426, November.
    9. Marco Pecoraro, 2014. "Is There Still a Wage Penalty for Being Overeducated But Well-matched in Skills? A Panel Data Analysis of a Swiss Graduate Cohort," LABOUR, CEIS, vol. 28(3), pages 309-337, September.
    10. Josse Delfgaauw & Robert Dur, 2008. "Incentives and Workers' Motivation in the Public Sector," Economic Journal, Royal Economic Society, vol. 118(525), pages 171-191, January.
    11. Douglas Cumming & Lars Hornuf & Moein Karami & Denis Schweizer, 2023. "Disentangling Crowdfunding from Fraudfunding," Journal of Business Ethics, Springer, vol. 182(4), pages 1103-1128, February.
    12. Maïlys Korber, 2019. "Does Vocational Education Give a Labour Market Advantage over the Whole Career? A Comparison of the United Kingdom and Switzerland," Social Inclusion, Cogitatio Press, vol. 7(3), pages 202-223.
    13. Ferreira, Daniel & Ginglinger, Edith & Laguna, Marie-Aude & Skalli, Yasmine, 2017. "Board Quotas and Director-Firm Matching," CEPR Discussion Papers 12117, C.E.P.R. Discussion Papers.
    14. Andonie, Costel & Kuzmics, Christoph & Rogers, Brian W., 2019. "Efficiency-based measures of inequality," Journal of Mathematical Economics, Elsevier, vol. 85(C), pages 60-69.
    15. Kim, Sang-Joon & Bae, John & Oh, Hannah, 2019. "Financing strategically: The moderation effect of marketing activities on the bifurcated relationship between debt level and firm valuation of small and medium enterprises," The North American Journal of Economics and Finance, Elsevier, vol. 48(C), pages 663-681.
    16. Kampelmann, Stephan & Rycx, François, 2012. "The impact of educational mismatch on firm productivity: Evidence from linked panel data," Economics of Education Review, Elsevier, vol. 31(6), pages 918-931.
    17. Benson, Rebecca & von Hippel, Paul T. & Lynch, Jamie L., 2018. "Does more education cause lower BMI, or do lower-BMI individuals become more educated? Evidence from the National Longitudinal Survey of Youth 1979," Social Science & Medicine, Elsevier, vol. 211(C), pages 370-377.
    18. Pavel Ciaian & Ján Pokrivčák & Dušan Drabik, 2008. "Prečo sú niektoré sektory v tranzitívnych ekonomikách menej reformované ako ostatné? prípad výskumu a vzdelávania v oblasti ekonómie [Why some sectors of transition economies are less reformed than," Politická ekonomie, Prague University of Economics and Business, vol. 2008(6), pages 819-836.
    19. Eduardo Perez-Richet, 2014. "Interim Bayesian Persuasion: First Steps," American Economic Review, American Economic Association, vol. 104(5), pages 469-474, May.
    20. Vaccari, Federico, 2023. "Competition in costly talk," Journal of Economic Theory, Elsevier, vol. 213(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:1304. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.