Unformatted text preview: -(1 + τ i ) p i for i = 1 ,...,n together with the following budget constraint n X i =1 p i (1 + τ i ) c i = l. Replacing out for prices (and taxes) from FOC into budget constraint gives the imple-mentability constraint. The feasibility follows by deﬁnition of equilibrium. Now consider allocations ( c,x,l ) that are feasible (given vector of g ) and satisfy ( 5 ). Con-struct prices from the FOC of the ﬁrm p i =-F i F l for i = 1 ,...,n set policy as 1 + τ i = U i U l F l F i for i = 1 ,...,n 4...
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- Fall '10
- Calculus, Trigraph, competitive equilibrium allocations