Microeconomics - Pareto Efficient
posted by Anonymous on .
Are all markets with deadweight loss pareto inefficient (including quotas, rent control, taxes, tarriffs, monopoly (unless there is price discrimination), oligopoly cournot model, oligopoly bertrand model and oligopoly stackleberg model)?
Am I right? I think that pareto efficient means the firms realize all potential gains and the markets that I've listed above do not realize all the outcomes (not sure if oligopolies are considered pareto inefficient though because of the incentive to cheat).
I think your first sentence is right. However, your reasoning is a bit off-base. Pareto-efficient implies that people with a marginal benefit above the marginal cost of producing the good can purchase that good. The above reasons you gave for deadweight losses also imply some mis-match between marginal cost and marginal revenue.
BTW, throw in externalities into your reasons for deadweight loss