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Hierarchic competitive equilibria

Authors
Journal
Journal of Mathematical Economics
0304-4068
Publisher
Elsevier
Publication Date
Volume
35
Issue
4
Identifiers
DOI: 10.1016/s0304-4068(01)00056-8
Keywords
  • Competitive Equilibrium
  • Survival Assumption
  • Hierarchic Price
  • Satiation Points
  • Pareto Optimality
  • Core Equivalence

Abstract

Abstract Without an interiority or strong survival assumption, an equilibrium may not exist in the standard Arrow–Debreu model. We propose a generalized concept of competitive equilibrium, called hierarchic equilibrium. Instead of using standard prices we use hierarchic prices. Existence will be shown without a strong survival assumption and without a non-satiation condition on the preferences. Under standard assumptions this reduces to the Walras equilibrium. Hierarchic equilibria are weakly Pareto optimal and any Pareto optimum can be decentralized without a border condition. We prove the existence of a Pareto optimal hierarchic equilibrium under additional assumptions. Later, we establish a core equivalence result.

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