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Existence of marginal pricing equilibria in economies with externalities and non-convexities

Author

Listed:
  • Jean-Marc Bonnisseau

    (CERMSEM - CEntre de Recherche en Mathématiques, Statistique et Économie Mathématique - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

  • Jean-Philippe Medecin

    (CERMSEM - CEntre de Recherche en Mathématiques, Statistique et Économie Mathématique - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

Abstract

We consider a general equilibrium model with externalities and non-convexities in production. The consumption sets, the preferences of the consumers and the production possibilities are represented by set-valued mappings to take into account possibility of external effects. There is no convexity assumption on the correspondences of production. We propose a definition of the marginal pricing rule, which generalizes the one used in the model without externality and, which satisfies a continuity assumption with respect to the external effect. We prove the existence of general equilibria under assumptions which allow us to encompass together the works on economies with externalities and convex conditional production sets, and those on marginal pricing equilibria in economies without externalities. We provide examples to illustrate the definition of the marginal pricing rule and to show the difference with the standard case.

Suggested Citation

  • Jean-Marc Bonnisseau & Jean-Philippe Medecin, 2001. "Existence of marginal pricing equilibria in economies with externalities and non-convexities," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00187219, HAL.
  • Handle: RePEc:hal:cesptp:hal-00187219
    DOI: 10.1016/S0304-4068(01)00077-5
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    References listed on IDEAS

    as
    1. Beato, Paulina & Mas-Colell, Andreu, 1985. "On marginal cost pricing with given tax-subsidy rules," Journal of Economic Theory, Elsevier, vol. 37(2), pages 356-365, December.
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    4. Moriguchi, Chiaki, 1996. "Two-part marginal cost pricing in a pure fixed cost economy," Journal of Mathematical Economics, Elsevier, vol. 26(3), pages 363-385.
    5. Jean-Marc Bonnisseau, 1994. "Caractérisation des optima de pareto dans une économie avec effets externes," Annals of Economics and Statistics, GENES, issue 36, pages 97-112.
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    7. Kamiya, Kazuya, 1988. "On the survival assumption in marginal (cost) pricing," Journal of Mathematical Economics, Elsevier, vol. 17(2-3), pages 261-273, April.
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    Citations

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    Cited by:

    1. Elena L. Mercato & Vincenzo Platino, 2017. "On the regularity of smooth production economies with externalities: competitive equilibrium à la Nash," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 63(1), pages 287-307, January.
    2. Jean-Marc Bonnisseau & Antoine Mandel & Yann Toma & François-Guy Trébulle, 2015. "Penser le changement climatique," PSE-Ecole d'économie de Paris (Postprint) halshs-01496167, HAL.
    3. Fuentes, Matías N., 2011. "Existence of equilibria in economies with externalities and non-convexities in an infinite-dimensional commodity space," Journal of Mathematical Economics, Elsevier, vol. 47(6), pages 768-776.
    4. Jean-Marc Bonnisseau & Matías Fuentes, 2020. "Market Failures and Equilibria in Banach Lattices: New Tangent and Normal Cones," Journal of Optimization Theory and Applications, Springer, vol. 184(2), pages 338-367, February.
    5. Elena L. Mercato & Vincenzo Platino, 2017. "Private ownership economies with externalities and existence of competitive equilibria: a differentiable approach," Journal of Economics, Springer, vol. 121(1), pages 75-98, May.
    6. Jean-Marc Bonnisseau & Matías Fuentes, 2022. "Increasing returns, externalities and equilibrium in Riesz spaces," Post-Print halshs-03908326, HAL.
    7. Holmberg, Pär & Tangerås, Thomas & Ahlqvist, Victor, 2018. "Central- versus Self-Dispatch in Electricity Markets," Working Paper Series 1257, Research Institute of Industrial Economics, revised 27 Mar 2019.
    8. Mandel, Antoine, 2008. "An index formula for production economies with externalities," Journal of Mathematical Economics, Elsevier, vol. 44(12), pages 1385-1397, December.
    9. Cuong Van & Frank Page & Myrna Wooders, 2007. "Risky arbitrage, asset prices, and externalities," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 33(3), pages 475-491, December.
    10. Vincenzo Platino, 2021. "Externalities in private ownership production economies with possibility functions. An existence result," Metroeconomica, Wiley Blackwell, vol. 72(3), pages 509-525, July.
    11. Antoine Mandel, 2009. "Changes in the firms behavior after the opening of markets of allowances," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 40(1), pages 1-25, July.
    12. Jean-Marc Bonnisseau & Matías Fuentes, 2018. "Market failures and equilibria in Banach lattices," Documents de travail du Centre d'Economie de la Sorbonne 18037, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    13. Jean-Marc Bonnisseau & Matías Fuentes, 2022. "Increasing returns, externalities and equilibrium in Riesz spaces," Working Papers halshs-03908326, HAL.

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    More about this item

    Keywords

    General equilibrium; External effects; Non-convex set-valued mappings; Marginal pricing; Clarke's normal cone;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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