General equilibrium and social choice in economies with increasing returns (Q803008)

This paper supplies a further example of inefficiency of marginal (cost) pricing equilibria. Assuming intransitive community preferences, but without requiring a fixed income formation rule, the author constructs an economy for which all equilibria are (Pareto) inefficient. To support that result, the author shows that there is an open and dense set of individual preferences which lead to intransitive community preferences.