The Cass criterion, also known as the Malinvaud–Cass criterion, is a central result in theory of overlapping generations models in economics. It is named after David Cass.[1][2] A major feature which sets overlapping generations models in economics apart from the standard model with a finite number of infinitely lived individuals is that the First Welfare Theorem might not hold—that is, competitive equilibria may be not be Pareto optimal.
If [math]\displaystyle{ p_t }[/math] represents the vector of Arrow–Debreu commodity prices prevailing in period [math]\displaystyle{ t }[/math] and if
then a competitive equilibrium allocation is inefficient.[3]
Original source: https://en.wikipedia.org/wiki/Cass criterion.
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