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Unlike the papers of some other great economists, those of Kenneth Arrow are being read and studied today with even greater care and attention than when they first appeared in journals. This publication of his collected papers, to be completed in seven topical volumes, will be welcomed by economists and other social scientists and in particular by graduate students, who can draw from them the deep knowledge and taste in the selection of scientific problems that only a master can offer.This volume is concerned with the foundations of neoclassical economic analysis. General equilibrium is a theory of prices in which all of the actions of the economic agents in an economy are determined simultaneously and in a decentralized fashion. The price system, determined in competitive markets, guides actions for both firms and individual consumers. All of the complex interrelations of the economy are distilled into the determination of this price system.In these papers, Arrow examines the conditions under which such a price system would exist. He also clarifies the conditions under which the system can or cannot achieve an optimum. In the latter case, when market failures are present, he shows the role of a benevolent government in helping to overcome the induced inefficiencies.
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