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On economic efficiency under non-convexity

  • Jean-Paul Chavas

    ()

  • Walter Briec

    ()

This paper investigates economic efficiency under non-convexity. The analysis relies on a generalization of the separating hyperplane theorem under non-convexity. The concept of zero-maximality is used to characterize Pareto efficiency under non-convexity. We show the existence of a separating hypersurface that can be used to provide a dual characterization of efficient allocations. When the separating hypersurface is non-linear, this implies that non-linear pricing is an integral part of economic efficiency. Implications for the decentralization of economic decisions under non-convexity are discussed. Copyright Springer-Verlag 2012

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File URL: http://hdl.handle.net/10.1007/s00199-010-0587-1
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Article provided by Springer in its journal Economic Theory.

Volume (Year): 50 (2012)
Issue (Month): 3 (August)
Pages: 671-701

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Handle: RePEc:spr:joecth:v:50:y:2012:i:3:p:671-701
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  1. Armstrong, Mark, 1996. "Multiproduct Nonlinear Pricing," Econometrica, Econometric Society, vol. 64(1), pages 51-75, January.
  2. Luenberger, David G., 1992. "Benefit functions and duality," Journal of Mathematical Economics, Elsevier, vol. 21(5), pages 461-481.
  3. Janusz A. Ordover & John C. Panzar, 1980. "On the Nonexistence of Pareto Superior Outlay Schedules," Bell Journal of Economics, The RAND Corporation, vol. 11(1), pages 351-354, Spring.
  4. Armstrong, Mark & Vickers, John, 2001. "Competitive Price Discrimination," RAND Journal of Economics, The RAND Corporation, vol. 32(4), pages 579-605, Winter.
  5. Guesnerie, Roger, 1975. "Pareto Optimality in Non-Convex Economies," Econometrica, Econometric Society, vol. 43(1), pages 1-29, January.
  6. McAfee, R Preston & McMillan, John & Whinston, Michael D, 1989. "Multiproduct Monopoly, Commodity Bundling, and Correlation of Values," The Quarterly Journal of Economics, MIT Press, vol. 104(2), pages 371-83, May.
  7. Bonnisseau, J.-M. & Cornet, B., 1986. "Valuation equilibrium and Pareto optimum in nonconvex economies," CORE Discussion Papers 1986036, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  8. Luenberger, David G, 1996. "Welfare from a Benefit Viewpoint," Economic Theory, Springer, vol. 7(3), pages 445-62, April.
  9. David G. Luenberger, 1996. "Welfare from a benefit viewpoint (*)," Economic Theory, Springer, vol. 7(3), pages 445-462.
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