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Pareto Superiority of Unegalitarian Equilibria in Stiglitz' Model of Wealth Distribution with Convex Saving Function
Francois Bourguignon
Abstract
This paper extends the conclusions obtained by Stiglitz and others about the asymptotic wealth distribution in the neo-classical growth model when the saving function is convex. It is shown not only that locally stable two-class unegalitarian equilibria may exist along with the egalitarian equilibrium, but also that they necessarily are Pareto superior to it. More generally, the paper also analyzes the class of Pareto optimal unegalitarian equilibria.
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