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On the Efficiency of Equilibrium with Transaction Costs
New Series, Vol. 56, No. 221 (Feb., 1989), pp. 49-59
Published by: Wiley on behalf of The London School of Economics and Political Science and The Suntory and Toyota International Centres for Economics and Related Disciplines
Stable URL: http://www.jstor.org/stable/2554494
Page Count: 11
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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.
Economica © 1989 London School of Economics