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Household Inefficiency and Equilibrium Efficiency

  • Hans Gersbach
  • Hans Haller
Chapter
Part of the Studies in Economic Theory book series (ECON.THEORY, volume 25)

Summary

Collective consumption decisions taken by the members of a household may prove inefficient. The impact on market performance depends on whether household inefficiencies are caused by inefficient net trades with the market or by inefficient distribution of resources within households. Inefficient net trades might be consistent with global efficiency. Inefficient internal distribution always results in inefficient equilibrium allocations. This leads us to consider competitive forces as disciplinary device for households. Competition of households for both resources and members can eliminate or reduce inefficient internal distribution.

Key words

General equilibrium Household decisions Household formation 

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Copyright information

© Springer-Verlag Berlin Heidelberg 2006

Authors and Affiliations

  • Hans Gersbach
    • 1
  • Hans Haller
    • 2
  1. 1.Alfred-Weber-InstitutInstitutUniversity of HeidelbergHeidelbergGermany
  2. 2.Department of EconomicsVirginia Polytechnic Institute and State UniversityBlacksburgUSA

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