The Fundamental Theorems of Modern Welfare Economics, Historically Contemplated
@article{Blaug2007TheFT, title={The Fundamental Theorems of Modern Welfare Economics, Historically Contemplated}, author={Mark Blaug}, journal={History of Political Economy}, year={2007}, volume={39}, pages={185-207} }
Modern welfare economics is formally summed up in two so-called fundamental theorems. The fi rst fundamental theorem states that, subject to certain exceptions—such as externalities, public goods, economies of scale, and imperfect information—every competitive equilibrium is Paretooptimal. The second fundamental theorem states that every Pareto-optimal allocation of resources is an equilibrium for a perfectly competitive economy, provided a redistribution of initial endowments and property…
99 Citations
Non-redistributive Second Welfare Theorems
- 2012
Economics
WINE
The second welfare theorem tells us that social welfare in an economy can be maximized at an equilibrium given a suitable redistribution of the endowments, and it is shown that it is NP-hard to find an optimal clustering in a linear exchange economy with a bounded number of goods and markets.
Islamic Economics and a Third Fundamental Theorem of Welfare Economics
- 2018
Economics
The discipline of economics started as a moral science but became detached from moral concerns over time to emulate natural science and to adopt positivism. Consequently, mainstream economics assumes…
The conflict that came with markets. Welfare economics in the history of economic thought
- 2012
Economics
The equivalence of Walrasian market equilibrium and Pareto optimality has become a benchmark against which actual markets are judged. The ruling has been that there is a need to bring in government…
Revisiting the History of Welfare Economics
- 2020
Economics
Our forthcoming book, Welfare Theory, Public Action and Ethical Values challenges the belief that, until modern welfare economics introduced issues such as justice, freedom and equality, economists…
Walras or Pareto: Who is to Blame for the State of Modern Economic Theory?
- 2021
Economics
ABSTRACT Walras and Pareto are considered founders of the Ecole de Lausanne. However, their points of view on economics as a science were at considerable variance and their appreciation of each other…
Economic Policy with and Without Maximizing Rules
- 2017
Economics
This paper contrasts the static neoclassical and the evolutionary views of the economy and economic policy. It responds to Ng's comments on Lipsey's original criticism of third‐best theory. Under a…
Normative Trade Theory
- 2012
Economics, History
It is more than two hundred and fifty years since Montesquieu (1749) wrote his ‘Lettre a William Domville’. In that essay Montesquieu discussed what would now be called the welfare implications of…
The Optimal Level of Market Competition: Neoclassical and New Institutional Conclusions Critiqued and Reformulated
- 2013
Economics
This paper examines a fundamental issue in the theory of economic organization: the optimal level of market competition. Answers in neoclassical and new institutional economics are identified and…
Adam Smith’s Economics and the Modern Minimum Wage Debate:The Large Distance Separating Kirkcaldy from Chicago
- 2016
Economics
In the post-World War II period the spearhead of opposition to minimum wage (MW) legislation has been economists associated with the Chicago School, such as Friedman, Stigler, and Becker. They have…
Policy Implications of Alternative Economic Paradigms: Some surprises from endogenous technological changes
- 2012
Economics
One of the most neglected issues in modern economics concerns the consequences of technological change that is ubiquitous and endogenous. To address these we need to model technology as more than a…
90 References
The Problem of Social Cost Revisited
- 1972
Economics
The Journal of Law and Economics
SOME years ago, in a paper entitled "The Problem of Social Cost,"' Professor Ronald Coase asserted and argued for a proposition which has since acquired the convenient sobriquet "the Coase Theorem."…
The Philosophy of Economics: Welfare Propositions of Economics and Interpersonal Comparisons of Utility
- 1939
Economics
Nicholas Kaldor (1908–1986) was born in Budapest and educated in Budapest, Berlin, and at the London School of Economics. In addition to an academic career, which was centered at Cambridge…
A critique of welfare economics
- 1950
Economics
A Critique of Welfare Economics was first published in 1950. It was concerned with the exposition, criticism, and appreciation of the theory of economic welfare as it had been developed to that date.…
EXISTENCE OF AN EQUILIBRIUM FOR A COMPETITIVE ECONOMY
- 1954
Economics
A. Wald has presented a model of production and a model of exchange and proofs of the existence of an equilibrium for each of them. Here proofs of the existence of an equilibrium are given for an…
Welfare Economics And The Theory Of The State
- 1952
Economics
The most general attribute that distinguishes government from other organizations is its coervice role, circumscribing the activities of all of its citizens and the other inhabitants of its…
General Equilibrium Theory: An Introduction
- 1997
Economics
Part I. General Equilibrium Theory: Getting Acquainted: 1. Concept and history of general equilibrium theory 2. An elementary general equilibrium model - the Robinson Crusoe economy 3. The Edgeworth…
Lectures on public economics
- 1980
Economics
This classic introduction to public finance remains the best advanced-level textbook on the subject ever written. First published in 1980, Lectures on Public Economics still tops reading lists at…
Adam Smith's Problems and Ours
- 1997
Economics
The paper contrasts what modern economists, reflecting the priorities of general equilibrium theory, expect to find in the Wealth of Nations with Smith's own much broader theoretical and policy…
THE GENERAL WELFARE IN RELATION TO PROBLEMS OF TAXATION AND OF RAILWAY AND UTILITY RATES. IN: RAILWAYS
- 1938
Economics
This classic paper defends the use of marginal cost pricing for railways. The author views his contributions as an extension of Dupuit's fundamental insights concerning the relation between the…
Adam Smith’s Theory of Economic Growth
- 2000
Economics, History
Adam Smith’s theory of economic growth is at first sight startlingly different from that of Quesnay and the Physiocrats. In their argument industry produces no investable surplus, and therefore makes…