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A Note On The Concept Of Approximate Equilibrium In Economic Theory

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  • DUNCAN K. FOLEY

    ()
    (Department of Economics, New School for Social Research, 6 East 16th Street, New York, NY 10003, USA; Santa Fe Institute, USA)

Abstract

The problem of the computability of Walrasian competitive equilibrium is considered from the point of view of concepts of approximate equilibrium. Neither the market-clearing nor Negishi approaches to the proof of existence of Walrasian competitive equilibrium give rise to adequately robust notions of approximate equilibrium. This explains the non-computability of Walrasian competitive equilibrium. The problem lies in the economic conception of markets, in particular the inconsistent treatment of information underlying the Walrasian definition. When trade takes place at disequilibrium prices decentralized market exchange redistributes income and economic welfare, and its equilibrium is path-dependent. The set of such equilibrium outcomes, however, in contrast to the Walrasian competitive equilibrium, is constructive and computable.

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Bibliographic Info

Article provided by World Scientific Publishing Co. Pte. Ltd. in its journal New Mathematics and Natural Computation.

Volume (Year): 08 (2012)
Issue (Month): 01 ()
Pages: 95-100

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Handle: RePEc:wsi:nmncxx:v:08:y:2012:i:01:p:95-100

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Keywords: Competitive equilibrium; computational economics; approximation;

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