Forced Trades in a Free Market

April 2015
in Individual and Collective Choice and Social Welfare: Essays in Honor of Nick Baigent, eds. Constanz Binder et al. (Springer, 2015)

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A free trade is always Pareto-improving. But some “free trades” are actually forced in the sense that they reflect the trader’s poverty rather than his or her preferences. We propose a rigorous concept of forced trade, and apply it to the ethical evaluation of Walrasian equilibria.