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THE CONCEPT OF GENERAL EQUILIBRIUM IN A MARKET ECONOMY WITH IMPERFECTLY COMPETITIVE PRODUCERS *
Author(s) -
Cornwall Richard R.
Publication year - 1977
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/j.1467-999x.1977.tb00563.x
Subject(s) - rivalry , competitor analysis , economics , competitive equilibrium , core (optical fiber) , externality , microeconomics , perfect competition , pareto principle , general equilibrium theory , exchange economy , computer science , telecommunications , operations management , management
This paper formulates a general equilibrium market economy where consumers are « perfect competitors » but producers take advantage of their ability to influence prices. It is shown that in such a model it is not reasonable for producers to attempt to maximize profits. Conditions are presented under which there exists a solution for such an economy which is Pareto‐efficient for the owners of the firms. Finally, it is shown that a pecuniary externality makes the core a very weak solution concept to use in analysing rivalry among producers.