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On economic efficiency under non-convexity

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Abstract

This paper investigates economic efficiency under non-convexity. The analysis relies on a generalization of the separating hyperplane theorem under non-convexity. The concept of zero-maximality is used to characterize Pareto efficiency under non-convexity. We show the existence of a separating hypersurface that can be used to provide a dual characterization of efficient allocations. When the separating hypersurface is non-linear, this implies that non-linear pricing is an integral part of economic efficiency. Implications for the decentralization of economic decisions under non-convexity are discussed.

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Authors and Affiliations

  1. University of Wisconsin-Madison, Taylor Hall, Madison, WI, 53706, USA

    Jean-Paul Chavas

  2. University of Perpignan, 52 avenue de Villeneuve, 66860, Perpignan, France

    Walter Briec

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  1. Jean-Paul Chavas
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  2. Walter Briec
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Correspondence to Jean-Paul Chavas.

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Chavas, JP., Briec, W. On economic efficiency under non-convexity. Econ Theory 50, 671–701 (2012). https://doi.org/10.1007/s00199-010-0587-1

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  • DOI: https://doi.org/10.1007/s00199-010-0587-1

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