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Walras and dividends equilibrium with possibly satiated consumers

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Author Info
Nizar Allouch () (Department of Economics Queen Mary, University of London Mile End Rd, E1 4NS London, United Kingdom)
Cuong Le Van () (PSE, Université Paris 1, CNRS CES, 106-112 boulevard de l'Hôpital 75647 Paris cedex 13)

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Abstract

The main contribution of the paper is to provide a weaker nonsatiation assumption than the one commonly used in the literature to ensure the existence of competitive equilibrium. Our assumption allows for satiation points in the set of individually feasible consumptions, provided that the consumer has satiation points available to him outside this set. As a result, we show the concept of equilibrium with dividends (See Aumann and Dreze (1986), Mas-Collel (1992)) is pertinent only when the set of satiation points is included in the set of individually feasible consumptions. Our economic motivation stems from the fact that in decentralized markets, increasing the incomes of consumers through dividends, if it is possible, is costly since it involves the intervention of a social planner. Then, we show, in particular, how in securities markets our weak nonsatiation assumption is satisfied by Werner's (1987) assumption.

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Paper provided by Development and Policies Research Center (DEPOCEN), Vietnam in its series Working Papers with number 08.

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Length: 20 pages
Date of creation: Jan 2008
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Handle: RePEc:dpc:wpaper:0808

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Related research
Keywords: Satiation; Dividends; Exchange Economy; Short-selling;

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Find related papers by JEL classification:
D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games

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References listed on IDEAS
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  1. Page Jr., Frank H. & Wooders, Myrna Holtz, 1996. "A necessary and sufficient condition for the compactness of individually rational and feasible outcomes and the existence of an equilibrium," Economics Letters, Elsevier, vol. 52(2), pages 153-162, August. [Downloadable!] (restricted)
  2. Alexander Konovalov, 2005. "The core of an economy with satiation," Economic Theory, Springer, vol. 25(3), pages 711-719, 04. [Downloadable!] (restricted)
  3. Werner, Jan, 1987. "Arbitrage and the Existence of Competitive Equilibrium," Econometrica, Econometric Society, vol. 55(6), pages 1403-18, November. [Downloadable!] (restricted)
  4. Allouch, Nizar & Le Van, Cuong & Page, Frank Jr., 2002. "The geometry of arbitrage and the existence of competitive equilibrium," Journal of Mathematical Economics, Elsevier, vol. 38(4), pages 373-391, December. [Downloadable!] (restricted)
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  5. Kajii, Atsushi, 1996. "How to discard non-satiation and free-disposal with paper money," Journal of Mathematical Economics, Elsevier, vol. 25(1), pages 75-84. [Downloadable!] (restricted)
  6. Cornet, Bernard & Topuzu, Mihaela & Yildiz, Aysegul, 2003. "Equilibrium theory with a measure space of possibly satiated consumers," Journal of Mathematical Economics, Elsevier, vol. 39(3-4), pages 175-196, June. [Downloadable!] (restricted)
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Cited by:
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  1. Norihisa Sato, 2008. "Some sufficient conditions for the existence of a competitive equilibrium in economies with satiated consumers," Economics Bulletin, Economics Bulletin, vol. 3(73), pages 1-8. [Downloadable!]
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