Abstract
If I dislike a commodity, you may have to pay to get me to accept it. But so long as some otherwise non-sated consumer finds this commodity to be desirable, or at least harmless, it could not have a negative price in competitive equilibrium. Likewise, if some firm can dispose of arbitrary amounts of a commodity without using any other inputs or producing any other (possibly noxious) outputs, its price in competitive equilibrium cannot be negative. Therefore competitive equilibrium analysis can be confined to the case of non-negative prices if every commodity is either harmless to someone or freely disposable.
‘I should like to buy an egg, please’ she said timidly. ‘How do you sell them?’ ‘Fivepence farthing for one — twopence for two,’ the Sheep replied. ‘Then two are cheaper than one?’ Alice said, taking out her purse. ‘Only you must eat both if you buy two,’ said the Sheep. ‘Then I’ll have one please’, said Alice, as she put the money down on the counter. For she thought to herself, ‘They mightn’t be at all nice, you know.’
Lewis Carroll, Through the Looking-Glass
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
Bibliography
Arrow, K.J. and Debreu, G. 1954. Existence of an equilibrium for a competitive economy. Econometrica 22, July, 265–90.
Bergstrom, T. 1976. How to discard free disposability — at no cost. Journal of Mathematical Economics 3(2), 131–4.
Debreu, G. 1956. Market equilibrium. Proceedings of the National Academy of Sciences of the USA 42, 876–8.
Debreu, G. 1959. The Theory of Value. New York: Wiley.
Debreu, G. 1962. New concepts and techniques for equilibrium analysis. International Economic Review 3, 257–73.
Gale, D. 1955. The law of supply and demand. Mathematica Scandinavica 3, 155–69.
Hart, O. and Kuhn, H. 1975. A proof of the existence of equilibrium without the free disposal assumption. Journal of Mathematical Economics 2(3), 335–43.
McKenzie, L. 1959. On the existence of general equilibrium for a competitive market. Econometrica 27(1), 54–71.
Rader, T. 1972. Theory of General Economic Equilibrium. New York: Academic Press.
Shafer, W. 1976. Equilibrium in economies without ordered preferences or free disposal. Journal of Mathematical Economics 3(2), 135–7.
Editor information
Copyright information
© 1989 Palgrave Macmillan, a division of Macmillan Publishers Limited
About this chapter
Cite this chapter
Bergstrom, T. (1989). Free Disposal. In: Eatwell, J., Milgate, M., Newman, P. (eds) General Equilibrium. The New Palgrave. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-19802-3_16
Download citation
DOI: https://doi.org/10.1007/978-1-349-19802-3_16
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-0-333-49525-4
Online ISBN: 978-1-349-19802-3
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)