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Price normalization under imperfect competition

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In general equilibrium models of imperfect competition the equilibria depend on how prices are normalized. This note shows that a price normalization preserves convexity properties if and only if prices are measured in terms of a fixed commodity bundle.

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Correspondence to Klaus Ritzberger.

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I am grateful to an anonymous referee for helpful comments, inspiring a simplification in the proof of the main result, and the argument in the Remark.

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Ritzberger, K. Price normalization under imperfect competition. Economic Theory 33, 365–368 (2007).

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