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Walras and dividends equilibrium with possibly satiated consumers

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Author Info
Nizar Allouch () (Queen Mary, University of London - Department of Economics)
Cuong Le Van () (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)

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Abstract

The main contribution of the paper is to provide a weaker non-satiation 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 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 HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number halshs-00241543_v1.

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Date of creation: Jan 2008
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Handle: RePEc:hal:cesptp:halshs-00241543_v1

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Related research
Keywords: Satiation; dividends; exchange economy; short-selling.;

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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.:
  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!]
  2. D. Won & G. Hahn & N. Yannelis, 2008. "Capital market equilibrium without riskless assets: heterogeneous expectations," Annals of Finance, Springer, vol. 4(2), pages 183-195, March. [Downloadable!] (restricted)
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