Advanced Search
MyIDEAS: Login to save this paper or follow this series

Existence and Efficiency of a Price-Taking Equilibrium in an Economy with Public Goods, Externalities and Property Rights: A Coasian Approach

Contents:

Author Info

  • John P. Conley

    ()
    (Department of Economics, Vanderbilt University)

  • Stefani C. Smith

Abstract

We consider a general equilibrium economy with public goods and externalities. Following Boyd and Conley (1997), we treat externality markets directly instead of indirectly through Arrovian commodities. Because such direct externality markets are not subject to the nonconvexities that Starrett (1972) shows are fundamental to Arrow's externality markets, this new approach admits the use of largely standard methods to prove welfare and existence theorems in an economy with externalities. We extend the Boyd and Conley model to allow firms to benefit from public goods and be damaged by externalities, and to allow consumers to produce externalities. We state a first welfare theorem and prove the existence of a competitive equilibrium. Taken together, this can be viewed as a type of general equilibrium Coase Theorem. Considered as a special case, these theorems also represent a significant generalization of existing results for pure public goods economies.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.accessecon.com/pubs/VUECON/vu04-w03.pdf
File Function: Revision, 2004
Download Restriction: no

Bibliographic Info

Paper provided by Vanderbilt University Department of Economics in its series Vanderbilt University Department of Economics Working Papers with number 0403.

as in new window
Length:
Date of creation: Jan 2004
Date of revision: Jan 2004
Handle: RePEc:van:wpaper:0403

Contact details of provider:
Web page: http://www.vanderbilt.edu/econ/wparchive/index.html

Related research

Keywords: Externalities; Coase Theorem; Arrow commodities; pollution permits; property rights; Lindahl Equilibrium;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Starrett, David A., 1972. "Fundamental nonconvexities in the theory of externalities," Journal of Economic Theory, Elsevier, Elsevier, vol. 4(2), pages 180-199, April.
  2. Khan, M. Ali & Vohra, Rajiv, 1987. "On the existence of Lindahl-Hotelling equilibria," Journal of Public Economics, Elsevier, Elsevier, vol. 34(2), pages 143-158, November.
  3. Harrison, Glenn W & McKee, Michael, 1985. "Experimental Evaluation of the Coase Theorem," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 28(3), pages 653-70, October.
  4. V.V. Chari & Larry E. Jones, 2000. "A reconsideration of the problem of social cost: Free riders and monopolists," Economic Theory, Springer, Springer, vol. 16(1), pages 1-22.
  5. Roberts, Donald John, 1973. "Existence of Lindahl equilibrium with a measure space of consumers," Journal of Economic Theory, Elsevier, Elsevier, vol. 6(4), pages 355-381, August.
  6. D. K. Foley, 1967. "Lindahl's Solution and the Core of an Economy with Public Goods," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 3, Massachusetts Institute of Technology (MIT), Department of Economics.
  7. Cres, Herve, 1996. "Symmetric Smooth Consumption Externalities," Journal of Economic Theory, Elsevier, Elsevier, vol. 69(2), pages 334-366, May.
  8. Hoffman Elizabeth & McCabe Kevin & Shachat Keith & Smith Vernon, 1994. "Preferences, Property Rights, and Anonymity in Bargaining Games," Games and Economic Behavior, Elsevier, Elsevier, vol. 7(3), pages 346-380, November.
  9. Aivazian, Varouj A & Callen, Jeffrey L & Lipnowski, Irwin, 1987. "The Coase Theorem and Coalitional Stability," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 54(216), pages 517-20, November.
  10. Hurwicz, Leonid, 1995. "What is the Coase Theorem?," Japan and the World Economy, Elsevier, Elsevier, vol. 7(1), pages 49-74, May.
  11. Diamantaras Dimitrios & Wilkie Simon, 1994. "A Generalization of Kaneko's Ratio Equilibrium for Economies with Private and Public Goods," Journal of Economic Theory, Elsevier, Elsevier, vol. 62(2), pages 499-512, April.
  12. Boyd, John III & Conley, John P., 1997. "Fundamental Nonconvexities in Arrovian Markets and a Coasian Solution to the Problem of Externalities," Journal of Economic Theory, Elsevier, Elsevier, vol. 72(2), pages 388-407, February.
  13. Khan, M. Ali & Vohra, Rajiv, 1985. "On the existence of lindahl equilibria in economies with a measure space of non-transitive consumers," Journal of Economic Theory, Elsevier, Elsevier, vol. 36(2), pages 319-332, August.
  14. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, Elsevier, vol. 29(1), pages 25-49, February.
  15. Bonnisseau, Jean-Marc, 1991. "Existence of Lindahl equilibria in economies with nonconvex production sets," Journal of Economic Theory, Elsevier, Elsevier, vol. 54(2), pages 409-416, August.
  16. Luenberger David G., 1994. "Optimality and the Theory of Value," Journal of Economic Theory, Elsevier, Elsevier, vol. 63(2), pages 147-169, August.
  17. Milleron, Jean-Claude, 1972. "Theory of value with public goods: A survey article," Journal of Economic Theory, Elsevier, Elsevier, vol. 5(3), pages 419-477, December.
  18. Baumol, William J, 1972. "On Taxation and the Control of Externalities," American Economic Review, American Economic Association, American Economic Association, vol. 62(3), pages 307-22, June.
  19. Gerard Debreu, 1961. "New Concepts and Techniques for Equilibrium Analysis," Cowles Foundation Discussion Papers, Cowles Foundation for Research in Economics, Yale University 129, Cowles Foundation for Research in Economics, Yale University.
  20. Osana, Hiroaki, 1973. "On the Boundedness of an Economy with Externalities," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 40(3), pages 321-31, July.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:van:wpaper:0403. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (John P. Conley).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.