Household Decisions and Equilibrium Efficiency |
| |
Authors: | Hans Haller |
| |
Institution: | Virginia Polytechnic Institute, U.S.A. |
| |
Abstract: | A general equilibrium model is introduced where a household may consist of several members, each with individual preferences and/or resources. When households obey collective rationality, certain intrahousehold externalities can be fully internalized by the respective households so that competitive exchange among households is efficient. As a rule, however, such intrahousehold externalities are not fully internalized by individual household members acting in their personal interest so that competitive exchange among such individuals is only efficient in exceptional cases. |
| |
Keywords: | |
|
|