Abstract
An exchange economy consists of a group of people, each of whom has preferences concerning what commodities he or she likes, and initial holdings of the various commodities available. Operating under whatever institutional rules permit freedom of contract, the society redistributes the initial holdings among itself so as to achieve a distribution that is in some sense a solution to the exchange problem.
This chapter was originally published in The New Palgrave Dictionary of Economics, 2nd edition, 2008. Edited by Steven N. Durlauf and Lawrence E. Blume
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Newman, P. (2008). Optimality and Efficiency. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95121-5_1594-2
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DOI: https://doi.org/10.1057/978-1-349-95121-5_1594-2
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Latest
Optimality and Efficiency- Published:
- 14 March 2017
DOI: https://doi.org/10.1057/978-1-349-95121-5_1594-2
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Original
Optimality and Efficiency- Published:
- 22 December 2016
DOI: https://doi.org/10.1057/978-1-349-95121-5_1594-1