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On the Different Notions of Arbitrage and Existence of Equilibrium

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  • Dana, Rose-Anne
  • Le Van, Cuong
  • Magnien, Francois

Abstract

In this paper we first prove an equilibrium existence theorem for finite dimensional economies with unbounded below consumption sets. We only assume that the individually rational utility set is compact and use the demand approach instead of the standard Negishi's approach. We next compare the different concepts of no-arbitrage that have been used in the literature and give conditions for equivalence between absence of arbitrage and existence of equilibrium. Lastly, we introduce the concept of strong unbounded arbitrage and show that the absence of strong unbounded arbitrage implies the compactness of the individually rational utility set.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 87 (1999)
Issue (Month): 1 (July)
Pages: 169-193

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Handle: RePEc:eee:jetheo:v:87:y:1999:i:1:p:169-193

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Web page: http://www.elsevier.com/locate/inca/622869

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  13. Werner, Jan, 1987. "Arbitrage and the Existence of Competitive Equilibrium," Econometrica, Econometric Society, vol. 55(6), pages 1403-18, November.
  14. Monteiro, Paulo K. & Page, Frank Jr. & Wooders, Myrna Holtz, 1997. "Arbitrage, equilibrium, and gains from trade: A counterexample," Journal of Mathematical Economics, Elsevier, vol. 28(4), pages 481-501, November.
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