Which of the following is not true in the case of second theorem of welfare economics?
1
If consumers exhibit convex preferences, every pareto efficient allocation is a possible competitive equilibrium in a pure exchange economy.
2
In an economy involving production, the convexity of production sets ensures that a pareto efficient allocation can be achieved as a market equilibrium.
3
It holds when there are increasing returns to scale.
4
It implies that in the market system, the allocative role and the distributive role can be separated from each other.