This paper establishes a set of conditions for the uniqueness and stability of the equilibrium price in exchange and production economies. Building on the earlier work of J. M. Grandmont and W. Hildenbrand, it shows that increasing heterogeneity in preferences (in some well-defined sense) causes aggregate Engel curves to become increasingly linear. So sufficient dispersion, together with the assumption that preferences and endowments are independently distributed, leads to the aggregate excess demand function satisfying the law of demand. Uniqueness and stability of the equilibrium price follows.
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Article provided by Econometric Society in its journal Econometrica.
Volume (Year): 65 (1997) Issue (Month): 6 (November) Pages: 1421-1442 Download reference. The following formats are available: HTML
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