منابع مشابه
Reallocation Costs and Efficiency
We study the efficient allocation of a divisible asset when reallocation is costly. Each of two players is initially allocated a share of the asset. At the time of this initial division the players’ valuations for the asset are uncertain. After the uncertainty resolves, costly reallocation may take place. Reallocation costs may depend on the amount reallocated and on players’ valuations. We fir...
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The implications of intersectoral factor reallocation costs (FRC) for economic growth are investigated by employing a stylised two-sector growth model with explicit FRC. It is shown that FRC are important to understand a number of empirical facts on economic growth: (i) Flexible economies are more likely to take advantage of favourable technology shocks. This mechanism might explain why some ec...
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Economists providing policy advice often justify recommendations of government non-interference in the allocation of resources between production sectors and free trade with reference to the Diamond and Mirrlees efficiency theorem. However, such policy advice may be misleading when, as is in general the case, administrative costs effectively restrict the set of feasible tax instruments availabl...
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Previous research suggests that a decline in transactions costs leads to improved economic efficiency. In this paper, we show that such a decline will introduce increasingly uninformed consumers into established markets. Using a model of financial market inefficiency, we show that this increase in uninformed individuals can increase market risk (volatility), can decrease efficiency, and may red...
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ژورنال
عنوان ژورنال: American Economic Journal: Microeconomics
سال: 2016
ISSN: 1945-7669,1945-7685
DOI: 10.1257/mic.20140262