Explain the conditions of pare to efficiency in a competitive market.
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If every trader cares only about the bundle she has (not the bundle any other trader has) then a competitive equilibrium allocation is Pareto efficient. Since the notion of Pareto efficiency is not connected with the notion of equity, this result does not imply that a competitive equilibrium is equitable.
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Answer:
If every trader cares only about the bundle she has (not the bundle any other trader has) then a competitive equilibrium allocation is Pareto efficient. Since the notion of Pareto efficiency is not connected with the notion of equity, this result does not imply that a competitive equilibrium is equitable.
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