Efficiency and core properties of valuation equilibrium with increasing returns

  1. Hammond, Peter
  2. Villar, Antonio
Journal:
Working papers = Documentos de trabajo: Serie AD

Year of publication: 2001

Issue: 24

Type: Working paper

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Abstract

This paper considers market economies involving the choice of a public environment when there are nonconvexities in production. It discusses the decentralization of efficient allocations by means of valuation equilibrium, adapting to many private goods the notion due to Mas-Colell (1980) which extends the Lindahlian approach to the pure theory of public goods. It is shown that a valuation equilibrium satisfies the two welfare theorems and is in the core.

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