To make high-quality research more accessible and easier to explore.

Fields:
7 results ✕ Clear filters

Pareto Inferior Trade

David Newbery; Joseph E. Stiglitz
Review of Economic Studies 1984 51(1), 1
The paper shows that between two competitive but risky economies with no insurance markets, free trade may be Pareto inferior to no trade. The model is simple enough to show clearly the role prices play in transferring and sharing risk when there is an incomplete set of markets, but rich enough to exhibit the resulting inefficiencies dramatically.