Short sales, destruction of resources, welfare

Nikolaos Kokonas, Herakles Polemarchakis

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A reduction in the output of productive assets (trees) in some contingencies may expand the range of risks spanned by the payoffs of assets and allow for better risk sharing; which may compensate for the loss of output and support a Pareto superior allocation. Surprisingly, if short sales of assets are not allowed, improved risk sharing that results from the destruction of output does not suffice to support a Pareto superior allocation.
Original languageEnglish
Pages (from-to)120-124
Number of pages4
JournalJournal of Mathematical Economics
Early online date29 Sept 2016
Publication statusPublished - 1 Dec 2016


  • short sales
  • destruction
  • welfare


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