Fundamental Non-convexity and Externalities: A Differentiable Approach

摘要

It is well known that externalities cause fundamental non-convexityrnproblems in the production set. We demonstrate that the differentiable approachrnis a proper tool. Existence of equilibrium obtains without requiring aggregaternconvexity in consumption or production. Our model allows general externalitiesrnin consumption and production and also price dependency.