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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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References

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  1. Jean-Marc Bonnisseau & Alexandrine Jamin, 2003. "Equilibria with increasing returns : sufficient conditions on bounded production allocations," Cahiers de la Maison des Sciences Economiques, Université Panthéon-Sorbonne (Paris 1) b05045, Université Panthéon-Sorbonne (Paris 1), revised Jun 2005.
  2. Bonnisseau, J.-M. & Cornet, B., 1986. "Existence of equilibria when firms follow bounded losses pricing rules," CORE Discussion Papers, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) 1986007, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Jean-Marc Bonnisseau & Bernard Cornet & Marc-Olivier Czarnecki, 2005. "The marginal pricing rule revisited," Cahiers de la Maison des Sciences Economiques, Université Panthéon-Sorbonne (Paris 1) b06021, Université Panthéon-Sorbonne (Paris 1).
  4. 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.
  5. Cornet, B., 1984. "Existence of equilibria in economies with increasing returns," CORE Discussion Papers, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) 1984007, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. M Ali Khan, 1998. "The Murdukovich Normal Cone and the Foundations of Welfare Economics," Economics Working Paper Archive, The Johns Hopkins University,Department of Economics 404, The Johns Hopkins University,Department of Economics.
  7. Bonnisseau, Jean-Marc & Cornet, Bernard, 1990. "Existence of Marginal Cost Pricing Equilibria: The Nonsmooth Case," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 31(3), pages 685-708, August.
  8. Cornet, Bernard, 1988. "General equilibrium theory and increasing returns : Presentation," Journal of Mathematical Economics, Elsevier, vol. 17(2-3), pages 103-118, April.
  9. Bonnisseau, J.-M. & Cornet, B., 1986. "Fixed-point theorems and Morse’s lemma for Lipschitzian functions," CORE Discussion Papers, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) 1986028, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  10. repec:hal:journl:halshs-00194881 is not listed on IDEAS
  11. Jouini, Elyes, 1988. "A remark on Clarke's normal cone and the marginal cost pricing rule," Journal of Mathematical Economics, Elsevier, vol. 17(2-3), pages 309-315, April.
  12. Jouini, Elyès, 1990. "Functions with constant generalized gradients," Economics Papers from University Paris Dauphine, Paris Dauphine University 123456789/5646, Paris Dauphine University.
  13. Guesnerie, Roger, 1975. "Pareto Optimality in Non-Convex Economies," Econometrica, Econometric Society, Econometric Society, vol. 43(1), pages 1-29, January.
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Cited by:
  1. Khan, M. Ali Khan, 2007. "Perfect Competition," MPRA Paper 2202, University Library of Munich, Germany.
  2. M. Ali Khan, 2007. "Perfect Competition," PIDE-Working Papers, Pakistan Institute of Development Economics 2007:15, Pakistan Institute of Development Economics.

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