NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Pecuniary & Market Mediated Externalities: Towards a General Theory of the Welfare Economics & Economies with Imperfect Information & Incomplete Mrkts

Bruce C. Greenwald, Joseph E. Stiglitz

NBER Working Paper No. 1304
Issued in March 1984
NBER Program(s):   PE

This paper presents a simple but quite general framework for analyzing the impact of informational externalities. By identifying the traditional pecuniary effect of these externalities which nets out,the paper greatly simplifies the problem of determining when tax interventions can be Pareto improving. In some cases it also leads to simple tests, based on readily observable indicators of the efficacy of a particular tax policy. The framework of the paper is used to analyze adverse selection, signalling, moral hazard, incomplete contingent claim markets and queue rationing equilibria.

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Document Object Identifier (DOI): 10.3386/w1304

Published: Greenwald, Bruce and Joseph E. Stiglitz. "Externalities in Economics with Incomplete Market Information," Quarterly Journal of Economics, Vol. CI, Issue 2, May 1986, pp. 229-264.

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