Indeterminacy of intertemporal equilibria under imperfect competition
AbstractIt is known that overlapping generations models with imperfectly competitive firms may exhibit a continuum of stationary equilibria. The reason of this indeterminacy is that different price expectation functions of consumers lead to different objective demand functions against which firms maximize. All these expectation functions fulfill perfect foresight in the equilibrium, but they can be arbitrary off the equilibrium. In this paper it is shown that it is not this arbitrariness which is responsible for the indeterminacy, but that the continuum of stationary equilibria emerges even if expectation functions are rational.
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Bibliographic InfoArticle provided by Springer in its journal Economic Theory.
Volume (Year): 17 (2001)
Issue (Month): 2 ()
Note: Received: March 25, 1999; revised version: February 16, 2000
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Web page: http://link.springer.de/link/service/journals/00199/index.htm
Find related papers by JEL classification:
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
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