Multiple Equilibria in Exchange Economies with Homothetic, Nearly Identical Preferences
AbstractFor agents with identical homothetic preferences (but possibly different endowments), aggregate excess demand can be derived from maximization of a utility function of a representative agent whose endowment is the sum of the individual's endowments. Such an economy has a unique equilibrium. In this paper, a metric p is defined on the set P of preference relations representable by CES utility functions. It is then shown that there are agentswhose preference relations in P are arbitrarily close to one another in t he metric p, and there are endowments for these agents, such that the resulting exchange economy has a multiple Walrasian equilibria.
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Bibliographic InfoPaper provided by Minnesota - Center for Economic Research in its series Papers with number 288.
Length: 26 pages
Date of creation: 1996
Date of revision:
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Postal: UNIVERSITY OF MINNESOTA, CENTER FOR ECONOMIC RESEARCH, DEPARTMENT OF ECONOMICS, MINNEAPOLIS MINNESOTA 35455 U.S.A.
Web page: http://www.econ.umn.edu/
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Find related papers by JEL classification:
- D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
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- Bergstrom Theodore C & Shimomura Ken-Ichi & Yamato Takehiko, 2009.
"Simple Economies with Multiple Equilibria,"
The B.E. Journal of Theoretical Economics,
De Gruyter, vol. 9(1), pages 1-31, December.
- Bergstrom, Ted C & Shimomura, Ken-Ichi & Yamato, Takehiko, 2008. "Simple Economies with Multiple Equilibria," University of California at Santa Barbara, Economics Working Paper Series qt6qv909xs, Department of Economics, UC Santa Barbara.
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