Article(electronic)January 1, 2015
Fundamental Non-convexity and Externalities: A Differentiable Approach
In: The B.E. journal of theoretical economics, Volume 15, Issue 1
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Abstract
AbstractIt 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.
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