"My own interest first centered on the relations between Pareto efficiency and competitive equilibrium. In particular, there was considerable discussion among economists in the late 1940’s about the inefficiencies resulting from rent control and different proposals for arriving at the efficiency benefits of a free market by one or another transition route. Part of the informal efficiency arguments hinged on the idea that under rent control people were buying the wrong kind of housing, say, excessively large apartments. It struck me that an individual bought only one kind of housing, not several. The individual optima were at corners, and therefore one could not equate marginal rates of substitution by going over to a free market. Yet diagrammatic analysis of simple cases suggested to me that the traditional identification of competitive equilibrium and Pareto efficiency was correct but could not be proved by the local techniques of the differential calculus."
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Academics from the United StatesPeople from New York CityMathematicians from the United StatesEconomists from the United StatesNobel laureates in Economics
Original Language: English
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"General Economic Equilibrium: Purpose, Analytic Techniques, Collective Choice", Les Prix Nobel en 1972 (1973)
https://en.wikiquote.org/wiki/Kenneth_Arrow
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Kenneth Arrow
Kenneth Joseph Arrow (August 23, 1921 – February 21, 2017) was an American economist, who was Professor Emeritus of Economics in Stanford, and joint winner of the Nobel Memorial Prize in Economics with John Hicks in 1972.
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