VJE Seminar: Marialaura Pesce (U Napoli)
Fairness in market economies
Abstract: We investigate the fairness property of equal-division competitive market equilibria in differential information economies presenting a two-fold generality: regarding the space of agents which may contain atoms and the informational asymmetries among traders. We first show that in atomless economies, once agents are asymmetrically informed, a strictly fair allocation might not be supported by an equilibrium price. A similar failure is due to the presence of large traders.
Indeed, we observe that, contrary to the core, the presence of arbitrarily many identical non-negligible agents is not enough to manipulate the measure of an envied coalition. Then, we provide two sufficient conditions under which, in complete information mixed economies, a redistribution of resources is strictly fair if and only if it results from a competitive mechanism.