Household Decisions and Equilibrium Efficiency

Posted: 6 Feb 2001

See all articles by Hans H. Haller

Hans H. Haller

Virginia Polytechnic Institute & State University - Department of Economics

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.

Suggested Citation

Haller, Hans H., Household Decisions and Equilibrium Efficiency. Available at SSRN: https://ssrn.com/abstract=247479

Hans H. Haller (Contact Author)

Virginia Polytechnic Institute & State University - Department of Economics ( email )

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