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Efficiency with Non‐Convexities: Extending the “Scandinavian Consensus” Approaches

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  • Peter J. Hammond
  • Antonio Villar

Abstract

There are two distinct “Scandinavian consensus” approaches to public good supply, both based on agents' willingness to pay. A Wicksell–Foley public competitive equilibrium arises from a negative consensus in which no change of public environment, together with associated taxes and subsidies which finance it, will be unanimously approved. Alternatively, in a Lindahl or valuation equilibrium, charges for the public environment induce a positive consensus. To allow general non‐convexities to be regarded as aspects of the public environment, we extend recent generalizations of these equilibrium notions and prove counterparts to both the usual fundamental efficiency theorems of welfare economics.

Suggested Citation

  • Peter J. Hammond & Antonio Villar, 1998. "Efficiency with Non‐Convexities: Extending the “Scandinavian Consensus” Approaches," Scandinavian Journal of Economics, Wiley Blackwell, vol. 100(1), pages 11-32, March.
    • Handle: RePEc:bla:scandj:v:100:y:1998:i:1:p:11-32
    DOI: 10.1111/1467-9442.00087
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    Cited by:

    1. Antonio Villar, 2007. "Competitive Pricing," Working Papers 07.08, Universidad Pablo de Olavide, Department of Economics.
    2. Antonio Villar Notario & Peter Hammond, 1998. "- Valuation Equlibrium Revisited," Working Papers. Serie AD 1998-24, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    3. Maria Graziano & Maria Romaniello, 2012. "Linear cost share equilibria and the veto power of the grand coalition," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 38(2), pages 269-303, February.
    4. Antonio Villar Notario & Peter Hammond, 2001. "Efficiency And Core Properties Of Valuation Equilibrium With Increasing Returns," Working Papers. Serie AD 2001-24, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    5. Antonio Villar Notario, 2000. "On The Efficiency Of Market Equilibrium In Production Economies," Working Papers. Serie AD 2000-17, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    6. Jason Shogren & Randy Moffett & Michael Margolis, 2002. "Coasean bargaining with nonconvexities," Applied Economics Letters, Taylor & Francis Journals, vol. 9(15), pages 971-977.

    More about this item

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • D6 - Microeconomics - - Welfare Economics

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