Ratio-Lindahl and ratio equilibria with many goods (Q1342406): Difference between revisions

The paper extends Kaneko's notion of a ratio equilibrium for one private good economies [see \textit{M. Kaneko}, J. Econ. Theory 16, 123-136 (1977; Zbl 0399.90019)] to economies with any number of private goods. This is done by combining the notion of a ratio equilibrium with that of a Lindahl equilibrium to propose the notion of a ratio-Lindahl equilibrium. The generality this framework allows for lies in the coexistence of both private firms and state owned firms which may have varying returns to scale at different stages of production which may include IRS. In the model analyzed, only private goods and those public goods which are produced by private firms are traded. The public goods produced by public firms are not traded in markets, even though the inputs required to produce such goods must be purchased from markets. The equilibrium framework adopted takes the Lindahl equilibrium with private ownership and the ratio equilibrium with state ownership as special cases of the ratio-Lindahl equilibrium. The existence of a ratio-Lindahl equilibrium for a mixed-ownership economy is demonstrated by showing that this equilibrium is equivalent to a Lindahl equilibrium for a transformed private ownership economy. The method of proof shows an easy way of finding the ratio-Lindahl equilibrium.