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Social Choice and Welfare

, Volume 9, Issue 3, pp 185–202 | Cite as

Equity and efficiency in non-convex economies

  • Rajiv Vohra
Article

Abstract

The objective of this paper is to consider the following question. Does the presence of increasing returns introduce a fundamental trade-off between equity and efficiency objectives? We show that if the no-envy notion of Foley (1967) is taken as the equity criterion and Pareto optimality as the efficiency criterion, then the answer is yes; there exist economies with increasing returns and well-behaved preferences (and no agent-specific inputs) in which there do not exist any envy-free and Pareto optimal allocations. We also propose a weakening of the no-envy criterion and prove that this weaker equity notion is compatible with Pareto optimality in general non-convex economies.

Keywords

Optimal Allocation Pareto Optimality Efficiency Criterion Pareto Optimal Allocation Equity Criterion 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer-Verlag 1992

Authors and Affiliations

  • Rajiv Vohra
    • 1
  1. 1.Department of EconomicsBrown UniversityProvidenceUSA

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