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The B.E. Journal of Theoretical Economics

Editor-in-Chief: Schipper, Burkhard

Ed. by Fong, Yuk-fai / Peeters, Ronald / Puzzello , Daniela / Rivas, Javier / Wenzelburger, Jan

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Fundamental Non-convexity and Externalities: A Differentiable Approach

Richard E. Ericson / Fan-chin Kung
Published Online: 2014-07-17 | DOI: https://doi.org/10.1515/bejte-2013-0065


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

JEL Classification: C62; D51; H41


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About the article

Published Online: 2014-07-17

Published in Print: 2015-01-01

Citation Information: The B.E. Journal of Theoretical Economics, Volume 15, Issue 1, Pages 49–62, ISSN (Online) 1935-1704, ISSN (Print) 2194-6124, DOI: https://doi.org/10.1515/bejte-2013-0065.

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