2008/01/01 by Allan M. Feldman · 2 citations
Economics, Econometrics and Finance · Decision Sciences · #Game Theory and Voting Systems #Auction Theory and Applications #Economic theories and models
paper · doi:10.1057/978-1-349-95121-5_1417-2
openalex publication_date 2008/01/01 · openalex created_date 2022/05/12 · openalex updated_date 2026/07/14
Welfare economics attempts to define and measure the ‘welfare’ of society as a whole. It tries to identify which economic policies lead to optimal outcomes, and, where necessary, to choose among multiple optima. This article answers three fundamental qsts with three fundamental theorems. In a competitive economy, will an equilibrium outcome be optimal? Can any optimal outcome be achieved by a modified market mechanism? Is there a reliable way to measure social welfare, or to derive the preferences of society from the preferences of individuals? The negative answer to the third question is partly overcome by the theory of implementation.