General equilibrium with increasing returns

Viac o knihe

This book explores general equilibrium with firms exhibiting increasing returns to scale, without assuming the convexity of production sets. It presents a comprehensive model and addresses key issues of existence and optimality. Increasing returns is a crucial yet challenging topic for economists, as it highlights a technological phenomenon that conflicts with competitive market dynamics. The analysis is complex because standard concepts often fail, particularly in defining supply mappings. Additionally, existing models struggle to resolve fundamental questions: normative models with nonconvex firms and marginal pricing do not yield efficient outcomes, while positive models cannot effectively incorporate monopolistic competition for firms with increasing returns. This monograph aims to demonstrate that the increasing returns question is neither insurmountable nor discouraging. It will show that the analysis can utilize tools similar to those in standard competitive models. The relevance of the findings will be emphasized, suggesting that a clearer understanding of increasing returns can enhance economic theory and practice.