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Household Decisions and Equilibrium Efficiency
Article first published online: 25 DEC 2001
DOI: 10.1111/1468-2354.00086
Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association
1468-2354/asset/cover.gif?v=1&s=fed4433db533e45650aec00d1db3fbb7fcc93278 "International Economic Review")
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How to Cite
Haller, H. (2000), Household Decisions and Equilibrium Efficiency. International Economic Review, 41: 835–847. doi: 10.1111/1468-2354.00086
Publication History
- Issue published online: 25 DEC 2001
- Article first published online: 25 DEC 2001
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.