Fundamental Non-convexity and Externalities: A Differentiable Approach

Ericson Richard E. () and Fan-chin Kung
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Ericson Richard E.: Department of Economics, East Carolina University, 10th Street, Greenville, NC 27858, USA

The B.E. Journal of Theoretical Economics, 2015, vol. 15, issue 1, 49-62

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.

Keywords: externalities and non-convexity; differentiable approach; production economy (search for similar items in EconPapers)
JEL-codes: C62 D51 H41 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (6)

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DOI: 10.1515/bejte-2013-0065

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