Ira Gang
Rutgers University
Department of Economics
E-mail: gang@economics.rutgers.edu
Item Number: [J15]
Title: The Stahl-Alexeev Paradox: A Note, Journal of Economic Theory,
44 (1988) 189-91
Abstract: We offer a simple proof of the paradox discovered
by Stahl and Alexeev that the introduction of black markets in a fixed price
ecoonomy with a rationing mechanism consisting of waiting line queues is
not necessarily a Pareto improvement. We show that the paradoxical
result arises from the fact that queue length is endogenous and illustrates
the general principle that permitting an additional market may be undesirable
in an economy which has other distortions.
Reference: Ira N. Gang and Edward Tower, The Stahl-Alexeev Paradox:
A Note, Journal of Economic Theory, 44 (1988) 189-91
.
Co-Author Information:
Edward Tower
Duke University
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