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Just Prices, Market (In)Efficiency and Wealth (In)Equality

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Law and Economics of Justice (ILEC 2023)

Part of the book series: Economic Analysis of Law in European Legal Scholarship ((EALELS,volume 17))

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Abstract

This chapter analyses the normative appeal of a conception of the just price based on the value of market efficiency (the ‘Efficiency Conception’). The chapter suggests that the Efficiency Conception is a normatively attractive conception of the just price only under conditions of wealth equality and discusses two common objections to the feasibility of a price system committed to wealth equality.

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Notes

  1. 1.

    Dworkin (2011), p. 160.

  2. 2.

    Dworkin (1977), p. 167; See also Dworkin (1986), p. 70; (2006), pp. 10–11, (2011) pp. 158–170.

  3. 3.

    Langholm (1979), p. 580, (1998), p. 85.

  4. 4.

    Reyes (2021).

  5. 5.

    Walsh and Lynch (2008), p. 135.

  6. 6.

    The canonical statement of these theorems is given by Arrow (1951), pp. 90–97.

  7. 7.

    Hayek (1945), p. 35; (1948), (2002), p. 9.

  8. 8.

    Heath (2018), p. 27.

  9. 9.

    Posner and Weyl (2018); For another defence of efficiency as a justification for the price mechanism, see Heath (2018).

  10. 10.

    Gordley (2001), p. 323.

  11. 11.

    For a concise but clear analysis of both efficiency criteria, with a focus on the economic analysis of law, see Mathis (2009), pp. 31–50.

  12. 12.

    Gordley (1981), (2001), (2022).

  13. 13.

    Reyes (2021), (2023).

  14. 14.

    Posner and Weil (2018).

  15. 15.

    As noted by Pistor (2019), pp. 230–231.

  16. 16.

    On this, see Mises (1932); Hayek (1945); Steele (1992).

  17. 17.

    Heath (2018), p. 30.

  18. 18.

    Ibid.

  19. 19.

    Lee (2018), pp. 1–2.

  20. 20.

    Sen (1982), pp. 54–73; Pettit (2001).

  21. 21.

    MacIntyre (2016), p. 77. See also ibid. pp. 183–189.

  22. 22.

    Kahneman, Knetsch & Thaler (1990), p. 1325.

  23. 23.

    On the prospect theory of choice, see Kahneman, Slovic & Tversky (1982); Kahnemann and Tversky (2000); Gilovich, Griffin an d Kahnemann (2002).

  24. 24.

    Luetchford and Orlando (2019), p. 2.

  25. 25.

    Herzog (2020).

  26. 26.

    Susanna Rustin, ‘This Cry for Help on a Primark Label Can’t Be Ignored | Susanna Rustin’ The Guardian (25 June 2014) <https://www.theguardian.com/commentisfree/2014/jun/25/primark-label-swansea-textile-industry-rana-plaza> accessed 27 February 2023; ‘Primark Claims “cry for Help Labels” Are a Hoax Carried out in the UK’ (The Independent, 28 June 2014) <http://www.independent.co.uk/news/uk/home-news/primark-claims-cry-for-help-labels-are-a-hoax-carried-out-in-the-uk-following-investigation-9569990.html> accessed 27 February 2023.

  27. 27.

    Marx (1890), pp. 279–280.

  28. 28.

    Samuelson (1957), p. 47. See also Roemer (1988), pp. 90–107, (1994), p. 37; Burczak (2006), pp. 105–107.

  29. 29.

    Cf Collingwood (1926), pp. 175–176; Heath (2018), pp. 27–28.

  30. 30.

    Posner and Weyl (2018).

  31. 31.

    Smith (1976), p. 48.

  32. 32.

    Posner and Weyl (2018).

  33. 33.

    Cf Steiner (1984).

  34. 34.

    Dworkin (2000); For a critique of the way Dworkin understands the auction mechanism, see Heath (2004).

  35. 35.

    Cf Carens (1981), pp. 12–17, 23–93.

  36. 36.

    Hayek (1944), p. 129.

  37. 37.

    Ibid.

  38. 38.

    See Hayek (1990), pp. 39–48.

  39. 39.

    Cf Reyes (2023).

  40. 40.

    Marx (1968), pp. 225–226; For an insightful comment on this passage, and on Marxism’s attitude towards social reform, see Cohen (2000), pp. 71–72, 58–78.

  41. 41.

    Cf Dagan (2020), p. xvi; Dworkin (1981), p. 283.

  42. 42.

    Mises (1932); On the economic calculation problem, see generally Steele (1992).

  43. 43.

    Rawls (1971), p. 3.

  44. 44.

    For a similar point, see Cohen (2008), pp. 302–307.

  45. 45.

    Heath (2018).

  46. 46.

    The case for the feasibility of a scheme in which equality and efficiency are satisfied has been made, among others, by Carens (1981), (1986); Wilkinson (2000); White (2003); Cohen (2008).

  47. 47.

    Cohen (2008), pp. 27–86.

  48. 48.

    Narveson (1978), p. 281; Quoted with approval in Cohen (2008), p. 27.

  49. 49.

    Cf Bowles (2016), pp. 9–39.

  50. 50.

    Ibid. p. 16.

  51. 51.

    For this paragraph, see Bowles (2016) passim, but especially pp. 21–25.

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Authors and Affiliations

  1. Universidad San Sebastián, Santiago, Chile

    Joaquín Reyes

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  1. Joaquín Reyes
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Correspondence to Joaquín Reyes .

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  1. Faculty of Law, University of Lucerne, Lucerne, Switzerland

    Klaus Mathis

  2. School of Law, University of Notre Dame, Notre Dame, IN, USA

    Avishalom Tor

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Reyes, J. (2024). Just Prices, Market (In)Efficiency and Wealth (In)Equality. In: Mathis, K., Tor, A. (eds) Law and Economics of Justice. ILEC 2023. Economic Analysis of Law in European Legal Scholarship, vol 17. Springer, Cham. https://doi.org/10.1007/978-3-031-56822-0_3

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