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Dispersed excess demands, the weak axiom and uniqueness of equilibrium

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  • Jerison, Michael

Abstract

This paper introduces an economically interpretable hypothesis that implies that mean excess demand satisfies the weak axiom and that competitive equilibrium is unique. The hypothesis requires, roughly, that the consumers' excess demand vectors spread apart on average as their wealth increases. The hypothesis is potentially testable using cross section data on consumer expenditures and endowments. It is satisfied in a robust class of economies, including those with suitable types of consumer heterogeneity. However, it implies stringent restrictions on the consumers' Engel curves if it is required to hold for every distribution of collinear consumer endowments.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Mathematical Economics.

Volume (Year): 31 (1999)
Issue (Month): 1 (February)
Pages: 15-48

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Handle: RePEc:eee:mateco:v:31:y:1999:i:1:p:15-48

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Web page: http://www.elsevier.com/locate/jmateco

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  1. Wolfgang Härdle & Werner Hildenbrand & Michael Jerison, 1989. "Empirical Evidence on the Law of Demand," Discussion Paper Serie A, University of Bonn, Germany 264a, University of Bonn, Germany.
  2. Jerison, Michael, 1994. "Optimal Income Distribution Rules and Representative Consumers," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 61(4), pages 739-71, October.
  3. Hildenbrand, Werner, 1989. "The Weak Axiom of Revealed Preference for Market Demand Is Strong," Econometrica, Econometric Society, Econometric Society, vol. 57(4), pages 979-85, July.
  4. Freixas, Xavier & Mas-Colell, Andreu, 1987. "Engel Curves Leading to the Weak Axiom in the Aggregate," Econometrica, Econometric Society, Econometric Society, vol. 55(3), pages 515-31, May.
  5. Jerison, Michael, 1984. "Aggregation and pairwise aggregation of demand when the distribution of income is fixed," Journal of Economic Theory, Elsevier, Elsevier, vol. 33(1), pages 1-31, June.
  6. Hildenbrand, Werner & Kneip, Alois, 1993. "Family expenditure data, heteroscedasticity and the Law of Demand," Ricerche Economiche, Elsevier, Elsevier, vol. 47(2), pages 137-165, June.
  7. John K.-H. Quah, 1997. "The Law of Demand when Income Is Price Dependent," Econometrica, Econometric Society, Econometric Society, vol. 65(6), pages 1421-1442, November.
  8. Marhuenda, F, 1995. "Distribution of Income and Aggregation of Demand," Econometrica, Econometric Society, Econometric Society, vol. 63(3), pages 647-66, May.
  9. Kihlstrom, Richard E & Mas-Colell, Andreu & Sonnenschein, Hugo, 1976. "The Demand Theory of the Weak Axiom of Revealed Preference," Econometrica, Econometric Society, Econometric Society, vol. 44(5), pages 971-78, September.
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Citations

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Cited by:
  1. Quah, John K.-H., 2008. "The existence of equilibrium when excess demand obeys the weak axiom," Journal of Mathematical Economics, Elsevier, Elsevier, vol. 44(3-4), pages 337-343, February.
  2. John Quah, 2004. "The Aggregate Weak Axiom in a Financial Economy through Dominant Substitution Effects," Economics Series Working Papers, University of Oxford, Department of Economics 2004-W18, University of Oxford, Department of Economics.
  3. Nachbar, John H., 2004. "General equilibrium comparative statics: discrete shocks in production economies," Journal of Mathematical Economics, Elsevier, Elsevier, vol. 40(1-2), pages 153-163, February.
  4. Werner Hildenbrand & Alois Kneip, 2005. "On behavioral heterogeneity," Economic Theory, Springer, Springer, vol. 25(1), pages 155-169, 01.
  5. John Quah, 2000. "Weak Axiomatic Demand Theory," Economics Series Working Papers, University of Oxford, Department of Economics 2000-W12, University of Oxford, Department of Economics.
  6. Gaël Giraud & Isabelle Maret, 2007. "The exact insensitivity of market budget shares and the "balancing effect"," Documents de travail du Centre d'Economie de la Sorbonne, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne b07023, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
  7. Michael Jerison, 2001. "Demand Dispersion, Metonymy and Ideal Panel Data," Discussion Papers, University at Albany, SUNY, Department of Economics 01-11, University at Albany, SUNY, Department of Economics.
  8. Brighi, Luigi, 2004. "A stronger criterion for the Weak Weak Axiom," Journal of Mathematical Economics, Elsevier, Elsevier, vol. 40(1-2), pages 93-103, February.
  9. Zigrand, Jean-Pierre, 2004. "A general equilibrium analysis of strategic arbitrage," Journal of Mathematical Economics, Elsevier, Elsevier, vol. 40(8), pages 923-952, December.
  10. John Quah, 2001. "Comparative Statics of the Weak Axiom," Economics Papers, Economics Group, Nuffield College, University of Oxford 2001-W3, Economics Group, Nuffield College, University of Oxford.
  11. Gael Giraud & John Quah, 2002. "Heterotic Models of Aggregate Demand," Economics Papers, Economics Group, Nuffield College, University of Oxford 2002-W18, Economics Group, Nuffield College, University of Oxford.
  12. Quah, John K. -H., 2003. "Market demand and comparative statics when goods are normal," Journal of Mathematical Economics, Elsevier, Elsevier, vol. 39(3-4), pages 317-333, June.
  13. Michael Jerison & John K.-H. Quah, 2006. "Law of Demand," Discussion Papers, University at Albany, SUNY, Department of Economics 06-07, University at Albany, SUNY, Department of Economics.
  14. repec:hal:journl:halshs-00155753 is not listed on IDEAS

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