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General equilibrium theory and increasing returns : an alternative to the survival assumption

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Abstract

Existence results for equilibria in economies under increasing returns to scale, fixed costs, or showing more general types of non convexity in the production sector, strongly rest on a crucial condition, known as the survival assumption. This assumption is unsatisfactory in the sense that it poses a condition on the set of production equilibria, an endogenous variable. We propose here conditions on the firms’ characteristics, notably on the firms' pricing behaviour, under which the equilibrium existence can be proved.

Suggested Citation

  • Jean-Marc Bonnisseau & Alexandrine Jamin, 2004. "General equilibrium theory and increasing returns : an alternative to the survival assumption," Cahiers de la Maison des Sciences Economiques b04017, Université Panthéon-Sorbonne (Paris 1).
  • Handle: RePEc:mse:wpsorb:b04017
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    File URL: ftp://mse.univ-paris1.fr/pub/mse/cahiers2004/B04017.pdf
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    References listed on IDEAS

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    1. A. P. Lerner, 1936. "A Note on Socialist Economics," Review of Economic Studies, Oxford University Press, vol. 4(1), pages 72-76.
    2. Cornet, Bernard, 1988. "General equilibrium theory and increasing returns : Presentation," Journal of Mathematical Economics, Elsevier, vol. 17(2-3), pages 103-118, April.
    3. Guesnerie, Roger, 1975. "Pareto Optimality in Non-Convex Economies," Econometrica, Econometric Society, vol. 43(1), pages 1-29, January.
    4. Vohra, Rajiv, 1992. "Marginal Cost Pricing under Bounded Marginal Returns," Econometrica, Econometric Society, vol. 60(4), pages 859-876, July.
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    More about this item

    Keywords

    General Equilibrium Theory; increasing returns; survival assumption.;

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies

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