Cost minimization of nonconvex firms under prices in normal cones.
Clarke's normal cone has been frequently used to formulate the marginal cost pricing rule for nonconvex firms. I provide examples where a firm with convex iso-output sets is not minimizing its cost at a price vector in the normal cone. For a firm to be cost minimizing under any price in the normal...
| Publicado en: | International Economic Review Vol. 35; pp. 1019 - 1029 |
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| Formato: | Artículo |
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Wiley-Blackwell
November 1994
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| Acceso en línea: | Ver este registro en EBSCOhost |
| Sumario: | Clarke's normal cone has been frequently used to formulate the marginal cost pricing rule for nonconvex firms. I provide examples where a firm with convex iso-output sets is not minimizing its cost at a price vector in the normal cone. For a firm to be cost minimizing under any price in the normal cone, lower hemicontinuity of the iso-output correspondence is sufficient. I also provide an extension of the second welfare theorem, with a price vector in the normal cone of each firm and cost minimization of firms. Reprinted by permission of the publisher. |
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