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Existence of Equilibria with a Tight Marginal Pricing Rule

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  • Bernard Cornet

    (Department of Economics, The University of Kansas)

  • Jean Marc Bonnisseau

    (Centre d'Economie de la Sorbonne, Universite Paris 1 Pantheon-Sorbonne)

Abstract

This paper deals with the existence of marginal pricing equilibria when it is defined by using a new and tighter normal cone introducedby B. Cornet and M.O. Czarnecki. The main interest of this new definition of the marginal pricing rule comes from the fact that it is more precise in the sense that the set of prices satisfying the condition is smaller than the one given by the Clarke's normal cone. The counter- part is that it is not convex valued, which leads to some mathematical diffculties in the existence proof. The result is obtained through an approximation argument under the same assumptions as in the previous existence results.

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Bibliographic Info

Paper provided by University of Kansas, Department of Economics in its series WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS with number 200908.

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Length: 19 pages
Date of creation: Dec 2009
Date of revision: Dec 2009
Handle: RePEc:kan:wpaper:200908

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Keywords: General economic equilibrium; increasing returns; marginal pricing rule; existence.;

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  1. Jean-Marc Bonnisseau & Bernard Cornet & Marc-Olivier Czarnecki, 2007. "The marginal pricing rule revisited," Economic Theory, Springer, vol. 33(3), pages 579-589, December.
  2. Cornet, B., 1984. "Existence of equilibria in economies with increasing returns," CORE Discussion Papers 1984007, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Bonnisseau, Jean-Marc, 1992. "Existence of equilibria in the presence of increasing returns : A synthesis," Journal of Mathematical Economics, Elsevier, vol. 21(5), pages 441-452.
  4. Guesnerie, Roger, 1975. "Pareto Optimality in Non-Convex Economies," Econometrica, Econometric Society, vol. 43(1), pages 1-29, January.
  5. Bonnisseau, Jean-Marc & Cornet, Bernard, 1988. "Existence of equilibria when firms follow bounded losses pricing rules," Journal of Mathematical Economics, Elsevier, vol. 17(2-3), pages 119-147, April.
  6. Jean-Marc Bonnisseau & Alexandrine Jamin, 2005. "Equilibria with increasing returns : sufficient conditions on bounded production allocations," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00194881, HAL.
  7. Bonnisseau, J.-M. & Cornet, B., 1986. "Fixed-point theorems and Morse’s lemma for Lipschitzian functions," CORE Discussion Papers 1986028, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  8. Bonnisseau, J.-M. & Cornet, B., 1988. "Existense of marginal cost pricing equilibria: the nonsmooth case," CORE Discussion Papers 1988015, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  9. Jouini, Elyes, 1989. "A remark on Clarke's normal cone and the marginal cost pricing rule," Journal of Mathematical Economics, Elsevier, vol. 18(1), pages 95-101, February.
  10. Khan, M Ali, 1999. " The Mordukhovich Normal Cone and the Foundations of Welfare Economics," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 1(3), pages 309-38.
  11. Cornet, Bernard, 1988. "General equilibrium theory and increasing returns : Presentation," Journal of Mathematical Economics, Elsevier, vol. 17(2-3), pages 103-118, April.
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Cited by:
  1. M Ali Khan, 2007. "Perfect Competition," Microeconomics Working Papers 22207, East Asian Bureau of Economic Research.
  2. Khan, M. Ali Khan, 2007. "Perfect Competition," MPRA Paper 2202, University Library of Munich, Germany.

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