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Dispersed Excess Demands, the Weak Axiom and Uniqueness of Equilibrium

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  • Michael Jerison

Abstract

This paper introduces an economically interpretable hypothesis that implies that mean excess demand satisfies the weak axiom and that competitive equilibrium is unique. The hypothesis requires, roughly, that the consumers' excess demand vectors spread apart on average as their wealth increases. The hypothesis is potentially testable using cross section data on consumer expenditures and endowments. It is satisfied in a robust class of economies, including those with suitable types of consumer heterogeneity. However, it implies stringent restrictions on the consumers' Engel curves if it is required to hold for every distribution of collinear consumer endowments.

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Bibliographic Info

Paper provided by University at Albany, SUNY, Department of Economics in its series Discussion Papers with number 98-03.

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Date of creation: 1998
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Handle: RePEc:nya:albaec:98-03

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Postal: Department of Economics, BA 110 University at Albany State University of New York Albany, NY 12222 U.S.A.
Phone: (518) 442-4735
Fax: (518) 442-4736

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Postal: Department of Economics, BA 110 University at Albany State University of New York Albany, NY 12222 U.S.A.
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Web: http://www.albany.edu/economics/research/workingp/index.shtml

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References

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  1. Kihlstrom, Richard E & Mas-Colell, Andreu & Sonnenschein, Hugo, 1976. "The Demand Theory of the Weak Axiom of Revealed Preference," Econometrica, Econometric Society, vol. 44(5), pages 971-78, September.
  2. John K.-H. Quah, 1997. "The Law of Demand when Income Is Price Dependent," Econometrica, Econometric Society, vol. 65(6), pages 1421-1442, November.
  3. Jerison, Michael, 1984. "Aggregation and pairwise aggregation of demand when the distribution of income is fixed," Journal of Economic Theory, Elsevier, vol. 33(1), pages 1-31, June.
  4. HARDLE, Wolfgang & HILDENBRAND, Werner & JERISON, Michael, . "Empirical evidence on the law of demand," CORE Discussion Papers RP -968, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. Jerison, Michael, 1994. "Optimal Income Distribution Rules and Representative Consumers," Review of Economic Studies, Wiley Blackwell, vol. 61(4), pages 739-71, October.
  6. Hildenbrand, Werner, 1989. "The Weak Axiom of Revealed Preference for Market Demand Is Strong," Econometrica, Econometric Society, vol. 57(4), pages 979-85, July.
  7. Freixas, Xavier & Mas-Colell, Andreu, 1987. "Engel Curves Leading to the Weak Axiom in the Aggregate," Econometrica, Econometric Society, vol. 55(3), pages 515-31, May.
  8. Marhuenda, F, 1995. "Distribution of Income and Aggregation of Demand," Econometrica, Econometric Society, vol. 63(3), pages 647-66, May.
  9. Hildenbrand, Werner & Kneip, Alois, 1993. "Family expenditure data, heteroscedasticity and the Law of Demand," Ricerche Economiche, Elsevier, vol. 47(2), pages 137-165, June.
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Citations

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Cited by:
  1. John Quah, 2006. "Weak axiomatic demand theory," Economic Theory, Springer, vol. 29(3), pages 677-699, November.
  2. John K.-H. Quah, 2004. "The existence of equilibrium when excess demand obeys the weak axiom," Economics Papers 2004-W07, Economics Group, Nuffield College, University of Oxford.
  3. John Quah, 2001. "Comparative Statics of the Weak Axiom," Economics Papers 2001-W3, Economics Group, Nuffield College, University of Oxford.
  4. John Quah, 2004. "The aggregate weak axiom in a financial economy through dominant substitution effects," Economics Papers 2004-W18, Economics Group, Nuffield College, University of Oxford.
  5. Zigrand, Jean-Pierre, 2004. "A general equilibrium analysis of strategic arbitrage," Journal of Mathematical Economics, Elsevier, vol. 40(8), pages 923-952, December.
  6. Michael Jerison, 2001. "Demand Dispersion, Metonymy and Ideal Panel Data," Discussion Papers 01-11, University at Albany, SUNY, Department of Economics.
  7. repec:hal:cesptp:halshs-00155753 is not listed on IDEAS
  8. Quah, John K. -H., 2003. "Market demand and comparative statics when goods are normal," Journal of Mathematical Economics, Elsevier, vol. 39(3-4), pages 317-333, June.
  9. John Quah & Gael Giraud, 2002. "Heterotic Models of Aggregate Demand," Economics Series Working Papers 2002-W18, University of Oxford, Department of Economics.
  10. Michael Jerison & John K.-H. Quah, 2006. "Law of Demand," Discussion Papers 06-07, University at Albany, SUNY, Department of Economics.
  11. Brighi, Luigi, 2004. "A stronger criterion for the Weak Weak Axiom," Journal of Mathematical Economics, Elsevier, vol. 40(1-2), pages 93-103, February.
  12. Nachbar, John H., 2004. "General equilibrium comparative statics: discrete shocks in production economies," Journal of Mathematical Economics, Elsevier, vol. 40(1-2), pages 153-163, February.
  13. repec:hal:journl:halshs-00155753 is not listed on IDEAS
  14. Gaël GIRAUD & Isabelle MARET, 2005. "The Exact Insensitivity of Market Budget Shares and the 'Balancing Effect'," Working Papers of BETA 2005-02, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  15. Werner Hildenbrand & Alois Kneip, 2005. "On behavioral heterogeneity," Economic Theory, Springer, vol. 25(1), pages 155-169, 01.

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