The Fundamental Theorems of Modern Welfare Economics, Historically Contemplated

@article{Blaug2007TheFT,
  title={The Fundamental Theorems of Modern Welfare Economics, Historically Contemplated},
  author={Mark Blaug},
  journal={History of Political Economy},
  year={2007},
  volume={39},
  pages={185-207}
}
  • M. Blaug
  • Published 2007
  • Economics
  • History of Political Economy
Modern welfare economics is formally summed up in two so-called fundamental theorems. The fi rst fundamental theorem states that, subject to certain exceptions—such as externalities, public goods, economies of scale, and imperfect information—every competitive equilibrium is Paretooptimal. The second fundamental theorem states that every Pareto-optimal allocation of resources is an equilibrium for a perfectly competitive economy, provided a redistribution of initial endowments and property… Expand

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