Theoretical Economics, Volume 1, Number 2 (July 2006)

Theoretical Economics 1 (2006), 143–166

Competitive markets with externalities

Mitsunori Noguchi, William R. Zame


This paper presents a general model of a competitive market with consumption externalities, and establishes the existence of equilibrium in the model, under assumptions comparable to those in classical models. The model allows production and indivisible goods. Examples illustrate the generality and applicability of the results.

Keywords: Competitive equilibrium, externalities, distributional economies

JEL classification: D5

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