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Existence of equilibrium in OLG economies with increasing returns

Jean-Marc Bonnisseau 1, 2, Lalaina Rakotonindrainy 1, 2

(2011-11)

We consider a standard overlapping generation economy with a simple demographic structure with a new cohort of agents at each period with an economic activity extended over two successive periods and finitely many firms active forever. The production possibilities are described by a sequence of production mapping and the main innovation comes from the fact that we allow for increasing returns to scale of more general type of non-convexities. To describe the behavior of the firms, we consider loss-free pricing rules, which covers the case of the average pricing rule, the competitive behavior when the firms have convex production sets, and the competitive behavior with quantity constraints à la Dehez-Drèze. We prove the existence of an equilibrium under assumptions, which are at the same level of generality than the ones for the existence in an exchange economy.

1:	Centre d'économie de la Sorbonne (CES)
	CNRS : UMR8174 – Université Paris I - Panthéon-Sorbonne
2:	Ecole d'Économie de Paris - Paris School of Economics (EEP-PSE)
	Ecole d'Économie de Paris

Research team: Axe Economie Mathématique et jeux

Subject

:

Humanities and Social Sciences/Economies and finances Humanities and Social Sciences/Methods and statistics Mathematics/Optimization and Control

Keyword(s): Overlapping generation model – increasing returns to scale – loss-free pricing rules – equilibrium – existence.

halshs-00654013, version 1

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From: Lucie Label <>

Submitted on: Tuesday, 20 December 2011 16:50:16

Updated on: Wednesday, 21 December 2011 14:03:36