Existence of equilibria when firms follow bounded losses pricing rules

Jean-Marc Bonnisseau (1, 2) , Bernard Cornet (1, 2)

1 CERMSEM - CEntre de Recherche en Mathématiques, Statistique et Économie Mathématique
2 CORE - Center of Operation Research and Econometrics [Louvain]

We consider a general equilibrium model of an economy with increasing returns to scale or more general types of non-convexity in production. The firms are instructed to set their prices according to general pricing rules which are supposed to have bounded losses. This includes the case of loss-free pricing rules hence, in particular, profit maximizing and average cost pricing. As for the marginal (cost) pricing rule, the bounded losses assumption for a firm is shown to be equivalent to the ‘star-shapedness' of its production set. This paper reports a general existence result in this model.

Mots clés: General equilibrium theory; increasing returns; pricing rules; existence

Domaines: Optimisation et contrôle [math.OC]; Economies et finances

Jean-Marc Bonnisseau, Bernard Cornet. Existence of equilibria when firms follow bounded losses pricing rules. Journal of Mathematical Economics, 1988, 17 (2-3), pp.119-147. ⟨10.1016/0304-4068(88)90003-1⟩. ⟨hal-00187223⟩