General equilibrium and social choice with increasing returns
For any intransitive community preference, we construct a non-convex economy where all the marginal cost pricing general equilibria are Pareto inefficient (theorem 3.2). The result is valid without requiring a fixed income distribution rule (corollary 3.3). Intransitive community preferences are a frequent occurrence (theorem 3.1): necessary and sufficient conditions for transitivity of the community preference fail in a set which is open and dense in the space of individual preferences with a standard topology.
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- Donald J. Brown & Geoffrey M. Heal & M. Ali Khan & Rajiv Vohra, 1984.
"On a General Existence Theorem for Marginal Cost Pricing Equilibria,"
Cowles Foundation Discussion Papers
724, Cowles Foundation for Research in Economics, Yale University.
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- Brown, Donald J & Heal, Geoffrey M, 1983. "Marginal vs. Average Cost Pricing in the Presence of a Public Monopoly," American Economic Review, American Economic Association, vol. 73(2), pages 189-93, May.
- Debreu, Gerard, 1972.
Econometric Society, vol. 40(4), pages 603-15, July.
- Donald J. Brown & Geoffrey Heal, 1979.
"Equity, Efficiency and Increasing Returns,"
Review of Economic Studies,
Oxford University Press, vol. 46(4), pages 571-585.
- Chichilnisky, Graciela, 1986. "Topological complexity of manifolds of preferences," MPRA Paper 8119, University Library of Munich, Germany.
- Chichilnisky, Graciela & Heal, Geoffrey, 1983. "Community preferences and social choice," Journal of Mathematical Economics, Elsevier, vol. 12(1), pages 33-61, September.
- Guesnerie, Roger, 1975. "Pareto Optimality in Non-Convex Economies," Econometrica, Econometric Society, vol. 43(1), pages 1-29, January.
- Chichilnisky, Graciela, 1980. "Social choice and the topology of spaces of preferences," MPRA Paper 8006, University Library of Munich, Germany.
- Chipman, John S., 1974. "Homothetic preferences and aggregation," Journal of Economic Theory, Elsevier, vol. 8(1), pages 26-38, May.
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