Market Failures and Equilibria in Banach Lattices: New Tangent and Normal Cones
Journal article: In this paper, we consider an economy with infinitely many commodities and market failures such as increasing returns to scale and external effects or other regarding preferences. The commodity space is a Banach lattice possibly without interior points in the positive cone in order to include most of the relevant commodity spaces in economics. We propose a new definition of the marginal pricing rule through a new tangent cone to the production set at a point of its (non-smooth) boundary. The major contribution is the unification of many previous works with convex or non-convex production sets, smooth or non-smooth, for the competitive equilibria and for the marginal pricing equilibria, with or without external effects, in finite-dimensional spaces as well as in infinite-dimensional spaces. In order to prove the existence of a marginal pricing equilibria, we also provide a suitable properness condition on non-convex technologies to deal with the emptiness of the interior of the positive cone.
Author(s)
Jean-Marc Bonnisseau, Matías Fuentes
Journal
- Journal of Optimization Theory and Applications
Date of publication
- 2020
Keywords JEL
Keywords
- Marginal pricing rule
- Banach lattices
- Market failures
- Properness
- General equilibrium
Pages
- 338–367
URL of the HAL notice
Version
- 1
Volume
- 184