When inefficiency begets efficiency

Arbeitspapier

Collective consumption decisions taken by the members of a household may prove inefficient. The impact of such inefficient household decisions on market performance is investigated. At one extreme, market efficiency can occur even when household decisions are inefficient, namely when household inefficiencies are merely due to inefficient net trades with the market. At the other extreme, market efficiency is bound to fail, if household inefficiencies are solely caused by an inefficient distribution of a household's aggregate consumption to its individual members. This leads us to consider competitive forces as a disciplinary device for households. When households compete for both resources and members then household stability requires efficient or not too inefficient internal distribution.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Reihe Ökonomie / Economics Series ; No. 128

Classification and Topics

• Classification: Wirtschaft ; Consumer Economics: Theory ; Exchange and Production Economies ; Allocative Efficiency; Cost-Benefit Analysis
• Subject: allocative efficiency ; general equilibrium ; household behavior ; Konsumtheorie ; Haushaltsökonomik ; Allgemeines Gleichgewicht ; Allokationseffizienz ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Gersbach, Hans ; Haller, Hans
• Event: Veröffentlichung
• (who): Institute for Advanced Studies (IHS)
• (where): Vienna
• (when): 2003

Further information

• Handle: http://hdl.handle.net/10419/71231
• Last update: 10.03.2025, 11:45 AM CET