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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

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

    Keywords

    General Equilibrium Theory; increasing returns; survival assumption;
    All these keywords.

    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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