Marginal pricing and marginal cost pricing equilibria in economies with externalities and infinitely many commodities

Abstract

This paper considers a general equilibrium model of an economy in which some firms may exhibit various types of non-convexities in production, there are external effects among agents and the commodity space is infinite dimensional. The consumption sets, the preferences of the consumers, and the production possibilities are represented by correspondences in order to take into account the external effects. The firms are instructed to follow the marginal pricing rule from which we obtain an existence theorem. Then, the existence of a marginal cost pricing equilibrium is proved by adding additional assumptions. The simultaneous presence of externalities and infinitely many commodities are sources of technical difficulties when attempting to generalize previous existence results in the literature.