General Equilibrium with Increasing Returns

1. Front Matter

   Pages I-XIII

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2. The Basic Model

   1. Front Matter

      Pages 1-4

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   2. Introduction

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      Pages 5-11

   3. Consumers

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      Pages 13-38

   4. Firms

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      Pages 39-48

   5. Equilibrium

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      Pages 49-62

3. Marginal Pricing and the Efficiency Problem

   1. Front Matter

      Pages 63-66

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   2. Marginal Pricing

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      Pages 67-81

   3. Two-Part Marginal Pricing

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      Pages 83-92

   4. Efficiency

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      Pages 93-105

4. Loss-Free Pricing Rules and Private Ownership Market Economies

   1. Front Matter

      Pages 107-109

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   2. Basic Results

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      Pages 111-120

   3. Constrained Profit Maximization

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      Pages 121-133

   4. Classical Equilibrium

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      Pages 135-150

5. Back Matter

   Pages 151-166

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This is a book on general equilibrium in which firms are allowed to exhibit increasing returns to scale (more precisely, in which the convexity of production sets is not assumed). As such, it provides a full fledged general equilibrium model and analyzes the chief questions concerning existence and optimality. Increasing returns is a topic which many economists find it to be simultaneously very imponant, very difficult and very discouraging. It is very important because it refers to a well established technological phenomenon which is essentially incompatible with the functioning of competitive markets. It is very difficult because the standard concepts and tools for the analysis fail (in particular, the supply mappings are not well defined). It is very discouraging because the available models do not seem to solve the basic questions: Normative models where nonconvex firms follow marginal pricing do not achieve efficient outcomes, and positive models cannot incorporate monopolistic competition as a way of defming the behavior of those firms with increasing returns to scale. I would like to think that this monograph will contribute to show that "the increasing returns question" is neither too difficult nor too discouraging. Concerning the difficulty, it will be shown that the analysis can be carried out with essentially the same tools as those applicable to the standard competitive model. As for the relevance of the results available, let me point out the following.

• General Equlibrium
• Gleichgewichtstheorie
• Increasing Returns
• Mathematische Ökonomie
• Non-Convexities
• complexity
• consumer
• efficiency
• equilibrium
• general equilibrium
• pricing
• welfare
• zunehmende Grenzerträge
• Ökonom
• Ökonomie

• Department of Economics, University of Alicante, Alicante, Spain

  Antonio Villar

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