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On The Efficiency Of Market Equilibrium In Production Economies

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  • Antonio Villar Notario

    (Instituto Valenciano de Investigaciones Económicas)

Abstract

This paper introduces the notion of Market Equilibrium With Active Consumers (MEWAC), in order to characterize the efficiency of market outcomes in production economies. We show that, no matter the behaviour followed by the firms, a market equilibrium is efficient if it is a MEWAC. And also that every efficient allocation can be decentralized as a MEWAC in which firms follow the marginal pricing rule.

Suggested Citation

  • 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).
  • Handle: RePEc:ivi:wpasad:2000-17
    as

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    References listed on IDEAS

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    1. Aaron S. Edlin & Mario Epelbaum & Walter P. Heller, 1998. "Is Perfect Price Discrimination Really Efficient?: Welfare and Existence in General Equilibrium," Econometrica, Econometric Society, vol. 66(4), pages 897-922, July.
    2. Hammond, Peter J & Villar, Antonio, 1998. " Efficiency with Non-convexities: Extending the "Scandinavian Consensus" Approaches," Scandinavian Journal of Economics, Wiley Blackwell, vol. 100(1), pages 11-32, March.
    3. Bonnisseau, Jean-Marc & Cornet, Bernard, 1988. "Existence of equilibria when firms follow bounded losses pricing rules," Journal of Mathematical Economics, Elsevier, vol. 17(2-3), pages 119-147, April.
    4. Makowski, Louis & Ostroy, Joseph M, 1995. "Appropriation and Efficiency: A Revision of the First Theorem of Welfare Economics," American Economic Review, American Economic Association, vol. 85(4), pages 808-827, September.
    5. 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.
    6. Rajiv Vohra, 1990. "On the Inefficiency of Two-Part Tariffs," Review of Economic Studies, Oxford University Press, vol. 57(3), pages 415-438.
    7. Antonio Villar, 2007. "Competitive Pricing," Working Papers 07.08, Universidad Pablo de Olavide, Department of Economics.
    8. Donald J. Brown & Geoffrey Heal, 1979. "Equity, Efficiency and Increasing Returns," Review of Economic Studies, Oxford University Press, vol. 46(4), pages 571-585.
    9. Antonio Villar Notario & Peter Hammond, 1998. "- Valuation Equlibrium Revisited," Working Papers. Serie AD 1998-24, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    10. Guesnerie, Roger, 1975. "Pareto Optimality in Non-Convex Economies," Econometrica, Econometric Society, vol. 43(1), pages 1-29, January.
    11. Donald A. Walker (ed.), 2000. "Equilibrium," Books, Edward Elgar Publishing, volume 0, number 1585.
    12. Vohra, Rajiv, 1988. "Optimal regulation under fixed rules for income distribution," Journal of Economic Theory, Elsevier, vol. 45(1), pages 65-84, June.
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