Evolutionary economics under nonconvexity and externalities

Jean-Paul Chavas and Runhao Wang

Oxford Economic Papers, 2021, vol. 73, issue 3, 1369-1389

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.

JEL-codes: C60 D6 I30 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (2)

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