Scandinavian Working Papers in Economics

Working Papers,
Lund University, Department of Economics

No 2006:6: Prices and Pareto Optima

Sjur Flam () and A. Jourani ()
Additional contact information
Sjur Flam: Economics Department, Bergen University, Postal: Economics Department, Bergen University, 5007 Bergen , Norway
A. Jourani: Institut de Mathématiques de Bourgogne, Postal: Institut de Mathématiques de Bourgogne, Université de Bourgogne , B.P. 47870 , 21078 Dijon, France

Abstract: We provide necessary conditions for Pareto optimum in economies where tastes or technologies may be nonconvex, nonsmooth, and affected by externalities. Firms can pursue own objectives, much like the consumers. Infinite-dimensional commodity spaces are accommodated. Public goods and material balances are accounted for as special instances of linear restrictions.

Keywords: first and second welfare theorem; weak and strong Pareto optimum; nonconvex tastes or technologies; public goods; externalities; local separation; subdifferentials; normal cones

JEL-codes: C60; D50; D60

17 pages, March 6, 2006

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