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On the Efficiency of Equilibrium with Transaction Costs

Rafael Repullo
Economica
New Series, Vol. 56, No. 221 (Feb., 1989), pp. 49-59
DOI: 10.2307/2554494
Stable URL: http://www.jstor.org/stable/2554494
Page Count: 11
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On the Efficiency of Equilibrium with Transaction Costs
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Abstract

This paper defines a concept of efficiency for economies with transaction costs, called Nash efficiency, which characterizes (in the sense of the fundamental theorems of welfare economics) equilibrium allocations in these economies. In particular, it is shown that these allocations are Nash-efficient, and that under certain conditions any Nash-efficient allocation may be decentralized as an equilibrium with a system of lump-sum transfers.

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