@TechReport{iza:izadps:dp12269,
            	author={Nyborg, Karine},
            	title={The Third Theorem of Welfare Economics: Report from a Fictional Field Study},
            	year={2019},
	month={Mar},
            	institution={Institute of Labor Economics (IZA)},
            	address={Bonn},
            	type={IZA Discussion Paper},
            	number={12269},
            	url={https://www.iza.org/publications/dp12269},
	abstract={The perfectly competitive market – a hypothetical situation free of market failure – is the basis for the two fundamental welfare theorems, and an important benchmark for economic theory. The radical abstractions of this idea, however, make its full implications hard to grasp. I address this using literary fiction. Part I discusses fiction as a tool for economic theory. Part II is a story about a journey to the perfectly competitive market. Part III develops main theoretical insights based on the story: First, complete social isolation is needed to preclude market failure. Second, the requirements of symmetric information and no external effects are extremely hard to reconcile, leading to an impossibility theorem: if trade is permitted anytime, and deliberate, welfare-relevant learning is feasible, no perfectly competitive market can exist.},
	keywords={perfect competition;narratives;social interaction;symmetric information;complete contracts;labor markets},
            }