Pareto Efficiency in the Jungle

Arbeitspapier

We include initial holdings in the jungle economy of Piccione and Rubinstein (Economic Journal, 2007) in which the unique equilibrium satisfies lexicographic welfare maximization. When we relax assumptions on consumption sets and preferences slightly, equilibria other than lexicographic welfare maximizers can be jungle equilibria. This result is due to myopia. We introduce the concept of farsightedness and show that farsighted jungle equilibria coincide with lexicographic welfare maximization. However, we also find farsighted equilibria that are Pareto inefficient since stronger agents may withhold goods from weaker agents. Here, gift giving by stronger agents is needed to achieve Pareto efficiency. We argue that even trade has a role in the jungle. Our results add to understanding coercion and the subtle role of gift giving and trade in an economy purely based on po wer relations.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Tinbergen Institute Discussion Paper ; No. 14-144/II

Classification and Topics

• Classification: Wirtschaft ; Exchange and Production Economies ; Allocative Efficiency; Cost-Benefit Analysis ; Comparative Studies of Particular Economies
• Subject: power ; coercion ; jungle economy ; farsightedness ; withholding

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Houba, Harold ; Luttens, Roland Iwan ; Weikard, Hans-Peter
• Event: Veröffentlichung
• (who): Tinbergen Institute
• (where): Amsterdam and Rotterdam
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/107857
• Last update: 10.03.2025, 11:43 AM CET