Externalities in Private Ownership Production Economies with Possibility Functions. An Existence Result

We consider a private ownership production economy with consumption and production externalities. Each household is characterized by a consumption set described by a possibility function, an endowment of commodities, and preferences described by a utility function. Each firm is owned by the household and it is characterized by technology desribed by a transformation function. Describing equlibria in terms of first order conditions and market clearing conditions, and using a homotopy approach, we prove the non-emptiness and compactness of the set of competitive equilibria with consumptions and prices strictly positive.