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Can a reallocation of initial endowments improve social welfare?

Author

Listed:
  • Elvio Accinelli

    (UASLP, Facultad de Economía, San Luis Potosí, México)

  • Leobardo Plata

    (UASLP, Facultad de Economía, San Luis Potosí, México)

  • Martín Puchet

    (UNAM, Facultad de Economía, México D.F.)

Abstract

In this paper we show that in a pure exchange economy it is possible to improve the social welfare along an e±cient path. This path will be called the Negishi map. Moving the relative weights of the agent in a social welfare utility function, we obtain an e±cient path of allocations and social weights, such that along this path the social welfare level change. Moving along this path it is possible to reach a maximum social welfare. The e±cient allocation maximizing the social welfare is characterized by the fact that the individual utilities have the same value. This level will be called the Negishi number of the economy. Such allocation is not necessarily an allocation corre- sponding to a walrasian equilibrium so, the participation of a benevolent policy maker can have sense. We introduce a de¯nition of developed economy. Finally, the relations between changes in utilities and changes in social weights is analized.

Suggested Citation

  • Elvio Accinelli & Leobardo Plata & Martín Puchet, 2007. "Can a reallocation of initial endowments improve social welfare?," Documentos de Trabajo (working papers) 0807, Department of Economics - dECON.
    • Handle: RePEc:ude:wpaper:0807
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    File URL: https://hdl.handle.net/20.500.12008/2074
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    References listed on IDEAS

    as
    1. Roberto Burguet & Bilateral, "undated". "Trade of Permits for Greenhouse Emissions," Working Papers 163, Barcelona School of Economics.
    2. Roberto Burguet & Jaume Sempere, 2010. "Trade of Permits for Greenhouse Gas Emissions: Bilateral Trade Need not be the Answer," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 46(4), pages 495-509, August.
    3. Elvio Accinelli, 1994. "Existence and uniqueness of the competitive equilibrium for infinite dimensional economies," Estudios de Economia, University of Chile, Department of Economics, vol. 21(2 Year 19), pages 313-326, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Negishi approach; Negishi map; social welfare;
    All these keywords.

    JEL classification:

    • D6 - Microeconomics - - Welfare Economics
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies

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