Strictly Fair Allocations in Large Exchange Economies
In this paper we introduce the concept of a strictly fair allociation and investigate the set of strictly fair allocations in large exchange economies. We prove that when agents' utility functions are differentiable, the set of strictly fair allocations coincides with the set of equal-income Walrasian equilibria. This is shown using both the “limit theorem” approach and the “limit economy” approach. We also extend the analysis to economies that have both atoms and an atomless sector. These results substantially improve upon the existing characterizations of equal-income Walrasian equilibria in terms of economic efficiency and economic equity.