Elzen, Antoon van den (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics) Kremers, Hans
Additional information is available for the following
registered author(s):
We consider a slightly adapted version of the general equilibrium model with possibly nonconvex production technologies presented by Villar (1994). Typical for such models is that the behaviour of a producer is modelled by a pricing rule that relates market prices and production vectors - a combination to which we refer as the market condition -with a set of acceptable prices for this producer. We prove the existence of a path of market conditions that links any arbitrarily chosen market condition with an equilibrium market condition. At an equilibrium market condition all markets are cleared and all producers accept the market prices. The adjustment of the market prices and production quantities along the path can be given some economic interpretation as a tatonnement process. Along this process the market prices are adjusted according to the sign of the excess demands on the underlying markets, and the production quantities according to the difference between market prices and acceptable prices. The existence theorem holds for any semi-algebraic version of the model, i.e. all sets and mappings in the model can be described by polynomial (in-)equalities. Any path connecting the initial market condition with an equilibrium market condition can be approximated arbitrarily close by applying a simplicial algorithm. By restarting this algorithm in a different market condition, we may find more than one equilibrium.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics in its series Serie Research Memoranda with number
0001.
Find related papers by JEL classification: D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
This paper has been announced in the following NEP Reports:
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.: