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In an economy with a non-convex production sector, we provide an assumption on each individual producer, which implies that the survival assumption holds true at the aggregate level for general pricing rules. For the marginal pricing rule, we derive this assumption from the bounded marginal productivity of inputs. We apply this approach to intertemporal economies and we show how our assumption fits well with the time structure. We obtain a tractable existence result of equilibria for discrete time growth models.
Keywords: general equilibrium theory; increasing returns; survival assumption; marginal pricing; general pricing rules; discrete time growth model
Published Online: 2011-6-8
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston