An Application of Nonsmooth Analysis to Mathematical Economics: Characterizing the Free Disposal Hypothesis through the Normal Cone at the Boundary of the Set

Authors

Keywords:

free disposal hypothesis, normal cone, general equilibrium, nonsmooth analysis, mathematical economics

Abstract

This paper is devoted to study some analytical properties of sets that satisfy the free disposal hypothesis. This hypothesis plays a relevant role in general equilibrium theory, because it is widely used to ensure both the positiveness of equilibrium prices and the efficiency of equilibrium allocation. The main result of this paper is a characterization of this hypothesis in terms of the normal cone to the set at its boundary points.

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References

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Clarke, F. (1983). Optimization and non-Smooth analysis. John Wiley & Sons, Inc.

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Khan, M. A., & Vohra, R. (1987). An extension of the second welfare theorem to economies with nonconvexities and public goods. The Quarterly Journal of Economics, 102(2), 223–241. https://doi.org/10.2307/1885061

Loewen, P. (1993). Optimal control via non-Smooth analysis. CRM Proceedings and Lectures Notes. Vol. 2. American Mathematical Society.

Rockafellar, R. T., & Wets, R. (1998). Variational analysis. Springer Verlag.

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Published

2004-10-31

How to Cite

Rivera C., J. (2004). An Application of Nonsmooth Analysis to Mathematical Economics: Characterizing the Free Disposal Hypothesis through the Normal Cone at the Boundary of the Set. Economic Analysis Review, 19(2), 147–156. Retrieved from https://www.rae-ear.org/index.php/rae/article/view/42

Issue

Vol. 19 No. 2 (2004)

Section

Articles

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Copyright (c) 2004 Jorge Rivera C.

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This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

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