Simple Economies with Multiple Equilibria
AbstractThis 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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Bibliographic InfoPaper provided by Department of Economics, UC Santa Barbara in its series University of California at Santa Barbara, Economics Working Paper Series with number qt6qv909xs.
Date of creation: 09 Jul 2008
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competive equilibrium; multiple equilibria; Shapley-Shubik; quasi-linear; exchange economy;
Other versions of this item:
- D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
- D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
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- 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.
- Juergen Huber & Martin Shubik & Shyam Sunder, 2009. "Default Penalty as a Selection Mechanism among Multiple Equilibria," Cowles Foundation Discussion Papers 1730R, Cowles Foundation for Research in Economics, Yale University, revised Dec 2012.
- Juergen Huber & Martin Shubik & Shyam Sunder, 2011. "Default Penalty as a Selection Mechanism Among Multiple," Levine's Working Paper Archive 786969000000000060, David K. Levine.
- Juergen Huber & Martin Shubik & Shyam Sunder, 2009. "Default Penalty as a Disciplinary and Selection Mechanism in Presence of Multiple Equilibria," Cowles Foundation Discussion Papers 1730, Cowles Foundation for Research in Economics, Yale University.
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