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Fundamental Non-convexity and Externalities: A Differentiable Approach

Author

Listed:
  • Ericson Richard E.

    (Department of Economics, East Carolina University, 10th Street, Greenville, NC 27858, USA)

  • Kung Fan-chin

    (Department of Economics, East Carolina University, 10th Street, Greenville, NC 27858, USA)

Abstract

It is well known that externalities cause fundamental non-convexity problems in the production set. We demonstrate that the differentiable approach is a proper tool. Existence of equilibrium obtains without requiring aggregate convexity in consumption or production. Our model allows general externalities in consumption and production and also price dependency.

Suggested Citation

  • Ericson Richard E. & Kung Fan-chin, 2015. "Fundamental Non-convexity and Externalities: A Differentiable Approach," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 15(1), pages 49-62, January.
    • Handle: RePEc:bpj:bejtec:v:15:y:2015:i:1:p:14:n:2
    DOI: 10.1515/bejte-2013-0065
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    References listed on IDEAS

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    1. Jean-Marc Bonnisseau & Elena Mercato, 2010. "Externalities, consumption constraints and regular economies," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 44(1), pages 123-147, July.
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    Cited by:

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    More about this item

    Keywords

    externalities and non-convexity; differentiable approach; production economy;
    All these keywords.

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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