Sufficient conditions for a “simple” decentralization with consumption externalities. (English) Zbl 1518.91073
Summary: We consider a pure exchange economy with consumption externalities in preferences. We use the notion of competitive equilibrium à la Nash. We provide the social redistribution assumption to restore the second welfare theorem. We then introduce the differentiable characterizations of social and strong redistribution. We show that all these conditions are weaker than other relevant assumptions studied in the literature. Our conditions entail interesting results on the decentralized implementation of Pareto optima, that link together the competitive supporting price and the shadow price of the utilitarian social planner. Finally, we provide a specific condition for Bergson-Samuelson utility functions, which has a nice interpretation in terms of positive or negative externalities.
Keywords:
consumption externalities; competitive equilibrium à la Nash; decentralization; social redistributionReferences:
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