The Inefficiency of the Stock Market Equilibrium

S-Tier
Journal: Review of Economic Studies
Year: 1982
Volume: 49
Issue: 2
Pages: 241-261

Score contribution per author:

8.043 = (α=2.01 / 1 authors) × 4.0x S-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

This paper establishes that when there is not a complete set of markets but more than one commodity the stock market equilibrium will not in general be a constrained Pareto optimum. The economy will lack both the property of exchange and production efficiency. Necessary conditions which must be satisfied if the economy is to be a constrained Pareto optimum for all technologies are derived; if all individuals have identical, homothetic indifference maps, then either there must be unitary price elasticities (so there is no effective risk) or all individuals must have the same degree of risk aversion (so there is no trade on the stock market).

Technical Details

RePEc Handle
repec:oup:restud:v:49:y:1982:i:2:p:241-261.
Journal Field
General
Author Count
1
Added to Database
2026-01-29