[This article uses the concept of "cone of interior displacements," which extends the notion of differentiability, to set up a characterization of Pareto optima in non-convex economies. A general theorem asserting that a Pareto optimum is a PA equilibrium is given and specifications are discussed. It is finally argued that the usual formulation of the doctrine of "marginal cost pricing"--as a doctrine Pareto optimal states in a non-convex decentralized economy--has unsatisfactory logical basis, and a way of defining a minimum degree of centralization inherent to non-convex economies is suggested.]

This article uses the concept of cone of interior displacements, which extends the notion of differentiability, to set up a characterization of Pareto optima in non-convex economies. A general theorem asserting that a Pareto optimum is a PA equilibrium is given and specifications are discussed. It is finally argued that the usual formulation of the doctrine of marginal cost pricingas a doctrine for achieving Pareto optimal states in a non-convex decentralized economy has unsatisfactory logical basis, and a way of defining a minimum degree of centralization inherent to non-convex economies is suggested. THE MAIN RESULTS of the economic theory of allocation of resources rest upon assumptions of convexity: convexity of production sets, and convexity of preferences. The relevance of these assumptions is often doubtful; even if in a many consumer economy the classical statements can be extended to the case of nonconvex preferences (this idea, pointed out first by Farrell [13] and Rothenberg [24], was developed in the general framework of economics with a continuum of agents as introduced by Aumann [4]; see W. Hildenbrand [18 and 19]), the indivisibilities arising in production are often large and create non-convexities that cannot be overlooked. Furthermore, non-convexities may arise with externalities (see Baumol [5], Kolm [20], and Starrett [25]), exchange of information (see Radner [23]), or stock markets (see Dreze [10]). Even if one must take the risk of producing less elegant results, a relevant economic theory cannot ignore non-convexities.

This paper examines justifications of the rational-expectations hypothesis that rely on the analysis of the agents' mental forecasting ("educing") activity (which involves "forecasting the forecasts" of others, etc.). The corresponding concept of eductive learning stability, based on the game-theoretical concept of rationalizability, is primarily used within the classical Muth model. Conditions for coordination of beliefs are interpreted and discussed; they are robust to the introduction of noise. More generally, eductive stability fits economic intuition on coordination: stability increases when the industry product differentiation increases and when decisions are sequential and observable.

[The paper considers a world in which one public good is financed by commodity taxes. It concentrates on the global study of the set of tax equilibria (corresponding to any possible taxation scheme). In particular conditions for "regularity" and connectedness of this set are exhibited. Consequences obtain both for the positive theory of tax incidence in general equilibrium (existence, continuity, uniqueness) and for normative theory ("regularity" of optimal solutions, algorithms of tax reform...).]

2advantageous. We are particularly concerned in this note by this latter type of cheating which involves initial resources. We point out that besides the intuitive explanation of

Because sunspot equilibria seem to be of central importance for an understanding of rational expectations, we seek here to characterize completely a limited class of sunspot equilibria (stationary ones with two possible natural events) in the simplest overlapping generations model of production. We present a sufficient condition for the existence of stationary sunspot equilibria, examine how these are related to strictly periodic equilibria of the same order, and investigate how deterministic stationary equilibria bifurcate to stationary sunspot equilibria. A concluding section examines how our results survive in more general settings.

, Pierre-Yves Geoffard, Roger Guesnerie, Sunspot Fluctuations Around a Steady State: The Case of Multidimensional One-Step Forward Looking Economic Models, Econometrica, Vol. 60, No. 5 (Sep., 1992), pp. 1097-1126

Central planning of production is usually performed under asymmetric information which leads to use of an incentive scheme. As the planner revises the scheme over time to take into account information provided by the firm's performance, this induces firms to underproduce to avoid more demanding schedules in the future—the ratchet effect. This paper explores this phenomenon under the realistic assumption that the planner cannot commit himself to a revision procedure. We show that the ratchet effect exists, in the sense that the planner may choose a scheme which is suboptimal from a static viewpoint in order to induce revelation, with the marginal price of output exceeding its optimal static value.

IN THIS PAPER, we study the existence of a general equilibrium in an economy in which some of the firms behave competitively, whereas others follow special pricing rules. An even casual observation of economic reality confirms the need for the inclusion of price setting firms in the study of general equilibrium models. And, in fact, this has been emphasized in the economic literature for some time. We consider this a sufficient justification to present a general equilibrium model which allows for both types of behavior-price setting as well as price taking behavior. The model to be presented will account for a wide range of price setting rules. We, however, find it appropriate to point out at the start that not all economically relevant price setting rules are covered. Although our model permits the drawing of useful conclusions for the general equilibrium theory of oligopolistic competition through prices, it is not especially designed for that purpose. In particular, our results are not applicable to the general equilibrium analysis with price making monopolistic firms, a subject on which there exists some literature.2 Our motivation as well as our modelling options and assumptions are directed to two fields where an increased interest in the theoretical foundations recently could be noticed.