Optimality in infinite horizon economies (Q1074481)

The book contains an original exposition of, in the authors' own words, the theory of ''welfare economics of overlapping generations models''. Obviously, the theory is related to many earlier results: the most frequently quoted authors are Balasko, Benveniste, Borglin, Cass, Majumdar, McFadden, Mitra, Peleg, Samuelson and Shell. The main emphasis has been put on mathematical coherence and uniformity of the exposition though economic interpretation is also clearly presented and the theory is accompanied by economic examples. Non-standard means of presentation include elements of semigroup and category theory. The book is divided into two parts: the first deals with one good models while the second (Chapter 6 through 9) explores the limits of extendability of the previously developed theory to the case of many goods. Thus, the first part presents the main ideas while the second comes closer to economics. A production and a consumption model are presented in Chapter 1. Chapter 2 proposes the concept of a ''reduced model'' which becomes then the main object of studies (the previous models are being ''reduced'' to this). To give the feeling of mathematics dealt with in the book I quote a few definitions: a reduced model is a sequence \((S_ i)\) of closed subsets of \({\mathbb{R}}^ 2\) such that \(0\in S_ i\) and \(S_ i+{\mathbb{R}}^ 2_ t=S_ i\) holds for all i; the model is efficient if there exists no sequence of reals \((x_ i)\), called improvement, such that for all i, \((-x_ i,x_{i+1})\in S_ i\) and one \(x_ j\) is positive; the model is weakly efficient if there is no improvement with a finite support. The latter is regarded as a proper counterpart of the usual concepts of efficiency in finite models. Chapter 3 deals with efficiency criteria for the reduced models, in particular parametric criteria arising ''from consideration of parameters describing the economy: typically supporting prices or some measures of curvature''. Let me close up with the authors' own summary: ''In Chapter 4 it is also shown that parametric efficiency criteria are closely related to approximations of a given model with sets belonging to some small family indexed by the associated measure of curvature.... In Chapter 5 we introduce axioms for a measure of curvature and show how these axioms determine uniquely a measure of curvature and a corresponding family of approximations.''