Myopic Law Preferences and Non-coercive Market Equilibria

This paper investigates the economic conditions under which the performance of a Judiciary does not impede noncoercive fair socioeconomic allocations under “Strotz-myopia” regarding the law variable, i.e., under a static view of it in an otherwise dynamic context. The law, here, is the positive factor by whichconsumption volume is multiplied as a result of law introduction in anotherwise fully private social economy. 

Lexicographic preferences regarding the law is the keyword in establishing non-coercive equilibria either in the static context of a stone-age economy or in the dynamic context of a jungle economy, given in the latter the presence of farsightedness. Nevertheless, such equilibria are found here to exist even under myopia and regardless the presence of lexicographic preferences. We first detect them within a fully private social economy, and we next qualify them by introducing the Judiciary as state officials. 

The optimality regarding state finances imposes additional restrictions in establishing myopic non-coercive equilibria. In any case, anequilibrium will be stable if it is not influenced by the homotheticity or notof the preferences, i.e., by income distribution considerations. So, any suboptimal behaviour of the Judiciary should be attributed exclusively to the suboptimality of state finances: Macroeconomics does affect law administration.