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Evolutionary economics under nonconvexity and externalities

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  • Jean-Paul Chavas
  • Runhao Wang

Abstract

This article examines the evolutionary behavior of boundedly rational agents under nonconvexity and externalities. While allowing for technical and allocative inefficiency, we evaluate how producer and consumer behavior can use evolutionary rules that eventually lead to Pareto efficient allocations. We study how markets can support the convergence to efficiency, stressing that externalities and nonconvexity can require nonlinear pricing. In an evolutionary economy, we show how pricing and decentralized decisions can support moves toward Pareto efficiency under bounded rationality, nonconvexity and externalities.

Suggested Citation

  • Jean-Paul Chavas & Runhao Wang, 2021. "Evolutionary economics under nonconvexity and externalities," Oxford Economic Papers, Oxford University Press, vol. 73(3), pages 1369-1389.
    • Handle: RePEc:oup:oxecpp:v:73:y:2021:i:3:p:1369-1389.
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    File URL: http://hdl.handle.net/10.1093/oep/gpab020
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    Cited by:

    1. Jean-Paul Chavas, 2023. "On the role of social rules in economic development: historical perspectives," Evolutionary and Institutional Economics Review, Springer, vol. 20(1), pages 123-139, April.
    2. Jean-Paul Chavas & Eleonora Matteazzi & Martina Menon & Federico Perali, 2022. "(In)Efficient Bargaining in the Family," Working Papers 2, SITES.

    More about this item

    JEL classification:

    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
    • D6 - Microeconomics - - Welfare Economics
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General

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