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On "sectoral supply functions" and some critical roles for the consumptions and leisure arbitrages in the stability properties of a competitive equilibrium with heterogeneous goods

Author

Listed:
  • Jean-Pierre Drugeon

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

Abstract

This article appraises a pareto-optimal competitive equilibrium with heterogeneous consumption goods through a new representation of competitive prices and the building of a pair of new aggregate structures labelled "sectoral supply functions" -- SSF -- that are defined over the aggregate values of the inputs and the relative price of the capital good. An alternative dual appraisal of a class of preferences that take explicit account of heterogeneous consumptions and leisure arbitrages then allows for an unrestricted class of general statements on the stability properties of an optimal accumulation environment that subsumes earlier results as special cases. These are based upon the features of Hicksian demands and it is argued that the retainment of a given sectoral configuration in factors shares and the imposition of concavity and positive income elasticities do not suffice to rule out optimal cycles if consumptions or leisure considered by pairs happen to exhibit complementaries. The SSF approach is finally argued to outshine the PPF protocole because it allows for a simple explicit derivation in the Cobb-Douglas case that have become, since the seminal contribution of Benhabib and Farmer in the nineties, the cornerstone of macroeconomic analysis.

Suggested Citation

  • Jean-Pierre Drugeon, 2010. "On "sectoral supply functions" and some critical roles for the consumptions and leisure arbitrages in the stability properties of a competitive equilibrium with heterogeneous goods," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00650678, HAL.
  • Handle: RePEc:hal:cesptp:hal-00650678
    DOI: 10.1016/j.jmateco.2010.08.008
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    Citations

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    Cited by:

    1. Jean-Paul Barinci & Hye-Jin Cho & Jean-Pierre Drugeon, 2021. "On equilibrium elasticities of substitution in simple overlapping generations economies with heterogeneous goods," SciencePo Working papers Main halshs-03238950, HAL.
    2. Barinci, Jean-Paul & Cho, Hye-Jin & Drugeon, Jean-Pierre, 2021. "On equilibrium elasticities of substitution in simple overlapping generations economies with heterogeneous goods," Mathematical Social Sciences, Elsevier, vol. 112(C), pages 120-137.
    3. Jean-Paul Barinci & Hye-Jin Cho & Jean-Pierre Drugeon, 2021. "On equilibrium elasticities of substitution in simple overlapping generations economies with heterogeneous goods," PSE-Ecole d'économie de Paris (Postprint) halshs-03238950, HAL.
    4. Jean-Paul Barinci & Hye-Jin Cho & Jean-Pierre Drugeon, 2021. "On equilibrium elasticities of substitution in simple overlapping generations economies with heterogeneous goods," Post-Print halshs-03238950, HAL.

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