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General equilibrium and social choice with increasing returns

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  • Chichilnisky, Graciela

Abstract

For any intransitive community preference, we construct a non-convex economy where all the marginal cost pricing general equilibria are Pareto inefficient (theorem 3.2). The result is valid without requiring a fixed income distribution rule (corollary 3.3). Intransitive community preferences are a frequent occurrence (theorem 3.1): necessary and sufficient conditions for transitivity of the community preference fail in a set which is open and dense in the space of individual preferences with a standard topology.

Suggested Citation

  • Chichilnisky, Graciela, 1990. "General equilibrium and social choice with increasing returns," MPRA Paper 8124, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:8124
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    References listed on IDEAS

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    1. Brown, Donald J. & Heal, Geoffrey M. & Ali Khan, M. & Vohra, Rajiv, 1986. "On a general existence theorem for marginal cost pricing equilibria," Journal of Economic Theory, Elsevier, vol. 38(2), pages 371-379, April.
    2. Chichilnisky, Graciela, 1986. "Topological complexity of manifolds of preferences," MPRA Paper 8119, University Library of Munich, Germany.
    3. Chichilnisky, Graciela & Heal, Geoffrey, 1983. "Community preferences and social choice," Journal of Mathematical Economics, Elsevier, vol. 12(1), pages 33-61, September.
    4. Paul A. Samuelson, 1956. "Social Indifference Curves," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 1-22.
    5. Donald J. Brown & Geoffrey Heal, 1979. "Equity, Efficiency and Increasing Returns," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 46(4), pages 571-585.
    6. Debreu, Gerard, 1972. "Smooth Preferences," Econometrica, Econometric Society, vol. 40(4), pages 603-615, July.
    7. Chipman, John S., 1974. "Homothetic preferences and aggregation," Journal of Economic Theory, Elsevier, vol. 8(1), pages 26-38, May.
    8. Chichilnisky, Graciela, 1980. "Social choice and the topology of spaces of preferences," MPRA Paper 8006, University Library of Munich, Germany.
    9. Guesnerie, Roger, 1975. "Pareto Optimality in Non-Convex Economies," Econometrica, Econometric Society, vol. 43(1), pages 1-29, January.
    10. Brown, Donald J & Heal, Geoffrey M, 1983. "Marginal vs. Average Cost Pricing in the Presence of a Public Monopoly," American Economic Review, American Economic Association, vol. 73(2), pages 189-193, May.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Chichilnisky, Graciela, 1990. "Social choice and the closed convergence topology," MPRA Paper 8353, University Library of Munich, Germany.
    2. Graciela Chichilnisky, 1990. "On The Mathematical Foundations Of Political Economy," Contributions to Political Economy, Cambridge Political Economy Society, vol. 9(1), pages 25-41.
    3. Chichilnisky, Graciela, 1993. "Topoloy and economics: the contributions of S. Smale," MPRA Paper 8485, University Library of Munich, Germany.

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    More about this item

    Keywords

    general equilibrium; pareto efficient; pareto inefficient; community preference; income distribution; topology; transitivity; market efficiency;
    All these keywords.

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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