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The Second Welfare Theorem with public goods in general economies


  • Alejandro Jofré
  • Jorge Rivera


In this paper we prove a general version of the Second Welfare Theorem for a non-convex and non-transitive economy, with public goods and other externalities in consumption. For this purpose we use the sub-gradient to the distance function (normal cone) to define the pricing rule in this general context.

Suggested Citation

  • Alejandro Jofré & Jorge Rivera, 2010. "The Second Welfare Theorem with public goods in general economies," Working Papers wp318, University of Chile, Department of Economics.
  • Handle: RePEc:udc:wpaper:wp318

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    References listed on IDEAS

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    More about this item


    Non-convex separation; Second Welfare Theorem; public goods; externalities.;

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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