Competitive Equilibrium and Pareto-Optimality without Free Disposal
Non free-disposal equilibrium is examined mainly using the notion of weak equilibrium (i.e., consumers' budget constraints are equalities by definition). The existence of a competitive equilibrium and its Pareto-optimality are investigated both for a pure-exchange economy and for a production economy. The assumptions for the existence of a weak equilibrium are weaker than the usual assumptions for a strong non free disposal-equilibrium or for a free disposal-equilibrium: in particular, the absence of a satiation consumption is not required nor is the convexity of preferences (weak convexity is sufficient). The weak (strong) Pareto-optimality of a weak equilibrium is demonstrated assuming that all consumers weakly (strongly) dislike smaller nominal wealth (all consumers always weakly dislike smaller nominal wealth in a strong equilibrium, which is always also a weakly Pareto-optimal weak equilibrium).
Year of publication: |
2001
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Authors: | MONTESANO, Aldo |
Published in: |
Rivista Italiana degli Economisti. - Società Italiana degli Economisti - SIE, ISSN 1593-8662. - Vol. 6.2001, 1, p. 3-30
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Publisher: |
Società Italiana degli Economisti - SIE |
Saved in:
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