Simple Economies with Multiple Equilibria

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Simple Economies with Multiple Equilibria

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Ted Bergstrom (University of California, Santa Barbara)
Ken-Ichi Shimomura (Kobe University)
Takehiko Yamato (Tokyo Institute of Technology)

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Ted Bergstrom

Abstract

This paper studies a general class of pure exchange economies that have multiple equilibria, which extend an example presented by Lloyd Shapley and Martin Shubik. For such economies, we find easily verified conditions that determine whether there are multiple equilibria. We also provide simple methods for constructing economies in which arbitrary pre-specified sets of prices are equilibria. These economies have simple comparative statics, since prices at interior competitive equilibrium depend on the parameters of utility but not on the endowment quantities.

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Paper provided by Department of Economics, UC Santa Barbara in its series University of California at Santa Barbara, Economics Working Paper Series with number 07-09-08.

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Date of creation: 09 Jul 2008
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Handle: RePEc:cdl:ucsbec:07-09-08

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

Gjerstad, S., 1996. "Multiple Equilibria in Exchange Economies with Homothetic, Nearly Identical Preferences," Papers 288, Minnesota - Center for Economic Research.
Shapley, Lloyd S & Shubik, Martin, 1977. "An Example of a Trading Economy with Three Competitive Equilibria," Journal of Political Economy, University of Chicago Press, vol. 85(4), pages 873-75, August. [Downloadable!] (restricted)
Kumar, Alok & Shubik, Martin, 2003. "A computational analysis of core convergence in a multiple equilibria economy," Games and Economic Behavior, Elsevier, vol. 42(2), pages 253-266, February. [Downloadable!] (restricted)

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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Juergen Huber & Martin Shubik & Shyam Sunder, 2009. "Default Penalty as Disciplinary and Selection Mechanism in Presence of Multiple Equilibria," Cowles Foundation Discussion Papers 1730, Cowles Foundation, Yale University. [Downloadable!]

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