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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"On a general existence theorem for marginal cost pricing equilibria,"
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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.
- Donald J. Brown & Geoffrey Heal, 1979.
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- Chichilnisky, Graciela, 1986. "Topological complexity of manifolds of preferences," MPRA Paper 8119, University Library of Munich, Germany.
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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.
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