Undominated prices in the three good model

  • Silvestre J
  • 3


    Mendeley users who have this article in their library.
  • 7


    Citations of this article.


Any movement away from Walrasian prices will make somebody worse off. We ask: Which other prices share this property? The paper characterizes the set of such prices, called 'undominated prices', for the three good economy (output, labor and a nonproduced good) that is now well known from the work of Barro-Grossman, Benassy and Malinvaud. We consider two groups of consumers: workers and shareholders. We show that, under some conditions, there exist prices and wages that generate unemployment and are undominated. This requires that (a) workers be poorly endowed with the nonproduced good, (b) there be little substitution in consumption between the produced and the nonproduced good, and (c) the market for the produced good be balanced (i.e., prices equal marginal costs). © 1988.

Get free article suggestions today

Mendeley saves you time finding and organizing research

Sign up here
Already have an account ?Sign in

Find this document


  • Joaquim Silvestre

Cite this document

Choose a citation style from the tabs below

Save time finding and organizing research with Mendeley

Sign up for free