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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"Equity, Efficiency, and Increasing Returns,"
Review of Economic Studies,
Wiley Blackwell, vol. 46(4), pages 571-85, October.
- Chichilnisky, Graciela & Heal, Geoffrey, 1983. "Community preferences and social choice," Journal of Mathematical Economics, Elsevier, vol. 12(1), pages 33-61, September.
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