chapter  7
24 Pages

Efficiency and Its Conditions

If people do not live only in markets, then the market acts proper are always performed in a wider environment of a principally different kind. The individual's strategic behavior! is thus subject to conditions of an apparently contradictory nature. Seen in a h istorical perspective they are, unlike natural conditions, the product of the humans themselves. But for each typical agentbe it a firm or a household-they represent, at any cross-section of the time stream, an externally given datum. 2

These conditions may be subsumed under three headings:

1. the society's "habits and customs" and the corresponding expectations, in part made rightful by laws on publicly funded education, social welfare, and health care;

3. the laws and regulations that open and therefore also enclose the space for market transactions, the prescripts being enacted and implemented partly by nation-states, partly by supranational bodies to which the former have surrendered a part of their sovereignty.