"There is little doubt that the observation that quality may depend on price (productivity on wages; default probability on interest rates) has provided a rich mine for economic theorists: A simple modification of the basic assumptions results in a profound alteration of many of the basic conclusions of the standard paradigm. The Law of Supply and Demand has been repealed. The Law of the Single Price has been repealed. The Fundamental Theorem of Welfare Economics has been shown not to be valid. More than that, the theories that we describe here provide the basis of progress toward a unification of macroeconomics and microeconomics. They pro vide an explanation of unemployment and credit rationing, derived from basic microeconomic principles. It is a theory in which the extensive idleness that periodically confronts society's resources, human and capital, is seen as but the most obvious example of market failures that prevasively and persistently distort the allocation of resources."
Quote Details
Added by wikiquote-import-bot
Unverified quote
0 likes
Original Language: English
Available Languages (1)
Sources
Joseph Stiglitz, "The Causes and Consequences of The Dependence of Quality on Price", Journal of Economic Literature, Vol. 25, No. 1 (March 1987).
https://en.wikiquote.org/wiki/Fundamental_theorems_of_welfare_economics
Revision History
No revisions have been submitted for this quote.
Categories
Fundamental theorems of welfare economics
3 quotes on TrueQuotesView all quotes by Fundamental theorems of welfare economics →
Related Quotes
"When I was a student at the University of Chicago, where I was a direct student of in the classroom, and an indirect …"
"If I had had perfect teachers, they would have known the Pareto work; they would have known Enrico Barone and what yo…"
"Though this is the proposition universally associated by tradition with the name of Pythagoras, no really trustworthy…"
"The cord stretched in the diagonal of an oblong produces both [areas] which the cords forming the longer and shorter …"
"The diagonal cord of a rectangle makes both (the squares) that the vertical side and the horizontal side make separat…"
"Some of the things, which belong particularly to the history of mathematics, we will not refrain from attributing to …"
"In the Shulba Sutra appended to Baudhayana’s Shrauta Sutra, mathematical instructions are given for the construction …"
"The first writer to attribute this proposition to Pythagoras is Vitruvius, hardly a reliable witness. From then on, t…"
"‘These operations are all founded on a very distinct conception of what happens in the case of an eclipse, and on the…"
"If we listen to those who like to record antiquities, we shall find them attributing this theorem to Pythagoras and s…"