Negishi on Edgeworth on Jevons’s law of indifference, Walras’s equilibrium, and the role of large numbers: a critical assessment
AbstractIn developing their pure-exchange equilibrium models, Jevons (1871), Walras (1874-77), and Edgeworth (1881) make use of some version of a law, called law of indifference (or principle of uniformity) by Jevons and Edgeworth and often referred to as the law of one price in connection with Walrasian economics. Edgeworth, in particular, shares with Jevons the idea that the law of indifference must be regarded as an equilibrium property; unlike his predecessor, however, he denies the validity of the law in all economies with a finite number of traders: for him, price uniformity can only emerge and a Jevonsian or Walrasian or competitive equilibrium can only be established when the traders’ number grows unboundedly large. About one century later, Negishi (1982) resumes the time-honoured discussion about the law, striving to prove that, contrary to Edgeworth’s original conjecture, a competitive equilibrium can be attained even in small economies, provided that the true driving force underlying Jevons’s law of indifference, namely, its implicit arbitrage mechanism, be allowed to operate and carry its effects through. In this paper, after reconstructing Jevons’s, Walras’s, and Edgeworth’s respective positions, we critically discuss Negishi’s critique of Edgeworth’s stance on Jevons’s law of indifference, Walras’s equilibrium, and the role of large numbers, showing that his central claim is unsubstantiated.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. 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.
Bibliographic InfoPaper provided by Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano in its series Departmental Working Papers with number 2011-23.
Date of creation: 22 Oct 2011
Date of revision:
; Walras; Edgeworth; law of indifference; equilibrium; large economies; arbitrage;
Find related papers by JEL classification:
- B13 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Neoclassical through 1925 (Austrian, Marshallian, Walrasian, Stockholm School)
- B21 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Microeconomics
- C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
- D41 - Microeconomics - - Market Structure and Pricing - - - Perfect Competition
- D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (DEMM Working Papers) The email address of this maintainer does not seem to be valid anymore. Please ask DEMM Working Papers to update the entry or send us the correct address.
If references are entirely missing, you can add them using this form.