The paper is devoted to applications of modern variational analysis to the study of Pareto (as well as weak and strong Pareto) optimal allocations in nonconvex models of welfare economics with infinite-dimensional commodity spaces. Our basic tool is the extremal principle of variational analysis that provides necessary conditions for set extremality and may be viewed as a variational extension of the classical convex separation principle to the case of nonconvex sets. In this way we obtain new versions of the generalized second welfare theorem for nonconvex economies in terms of appropriate concepts of normal cones.
Number in Series
Applied Mathematics | Mathematics
Mordukhovich, Boris S., "Pareto Optimal Allocations in Nonconvex Models of Welfare Economics" (2003). Mathematics Research Reports. 9.