Pareto Optimality in Infinite Horizon Exchange Economies with Long-Run Concerns

Thursday 17 May 2012, 1.15PM to 2:15pm

Speaker(s): Jacco Thijssen (University of York)

Pareto Optimality in Infinite Horizon Exchange Economies with Long-Run Concerns

Simon P. Eveson and Jacco J.J. Thijssen

Abstract

In this paper we study the attainability of Pareto optimal allocations in infinite dimensional exchange economies where agents have long-run concerns. The commodity space that we use is the space of all convergent sequences. We find that a necessary and sufficient  ondition for the utility possibility set to be closed is that preferences are pairwise time value consistent. This means that for each pair of consumers the ratio of their discounting sequences should converge to the ratio of their utility weights at infinity. This, in turn, implies that efficiency can only be attained if consumers' valuations of time are highly coordinated.

Location: Economics Staff Room (EC/202)

Admission: For Staff and Postgraduate students