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2016 | OriginalPaper | Chapter

11. Welfare and Efficiency: Socioeconomic Controversies in Modern Times

Author : Michihiro Ohyama

Published in: Macroeconomics, Trade, and Social Welfare

Publisher: Springer Japan

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Abstract

In recent years, we have witnessed a number of critics and commentators who argue that the pursuit of efficiency spoils the realization of social values such as security, health, environment, and fairness. Is it really true that the pursuit of efficiency impedes social values? What are the social values to begin with? Are they to be distinguished from the individual values in the narrow sense defined in economics? In this chapter, we intend to review the relevant concepts and elucidate the relationship between social values and efficiency.

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previous chapter Market, Trade, and Welfare in General Equilibrium

next chapter A Theoretical Framework of Mixed Systems

Given the budget (target) G ₀ (= R ₀), the socially optimal equilibrium must be located somewhere on the value frontier G _O R _O. The misallocation of resources arises from the swindle of the social indifference curve by that of the national enterprise.

The common view is that there are trade-offs between fairness (or equity) and efficiency. See Examples 2 and 3 above, or Mankiw (1998), Krugman and Wells (2006). We do not share this view.

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Title: Welfare and Efficiency: Socioeconomic Controversies in Modern Times
Author: Michihiro Ohyama
Publisher: Springer Japan
Book: Macroeconomics, Trade, and Social Welfare
Print ISBN: 978-4-431-55805-7

Electronic ISBN: 978-4-431-55807-1

Copyright Year: 2016
DOI: https://doi.org/10.1007/978-4-431-55807-1_11