IDEAS home Printed from https://ideas.repec.org/a/ebl/ecbull/eb-11-00252.html
   My bibliography  Save this article

On the instability of competitive equilibrium: a further example

Author

Listed:
  • Junichi Minagawa

    (Part-time Lecturer, Tokyo University of Foreign Studies)

Abstract

It is shown that a Walrasian price adjustment process fails to converge to an equilibrium in an exchange economy with three consumers and three commodities, where each consumer has a quasilinear utility function, desires only two commodities, and demands positive amounts of both commodities. The instability is due to weak substitution effects in addition to asymmetrical income effects.

Suggested Citation

  • Junichi Minagawa, 2012. "On the instability of competitive equilibrium: a further example," Economics Bulletin, AccessEcon, vol. 32(1), pages 80-85.
    • Handle: RePEc:ebl:ecbull:eb-11-00252
    as

    Download full text from publisher

    File URL: http://www.accessecon.com/Pubs/EB/2012/Volume32/EB-12-V32-I1-P9.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Mukherji, Anjan, 2007. "Global stability condition on the plane: A general law of demand," Journal of Economic Theory, Elsevier, vol. 134(1), pages 583-592, May.
    2. Anderson, Christopher M. & Plott, Charles R. & Shimomura, K.-I.Ken-Ichi & Granat, Sander, 2004. "Global instability in experimental general equilibrium: the Scarf example," Journal of Economic Theory, Elsevier, vol. 115(2), pages 209-249, April.
    3. Shapley, Lloyd S & Shubik, Martin, 1977. "An Example of a Trading Economy with Three Competitive Equilibria," Journal of Political Economy, University of Chicago Press, vol. 85(4), pages 873-875, August.
    4. Hirota, Masayoshi, 1981. "On the Stability of Competitive Equilibrium and the Patterns of Initial Holdings: An Example," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 22(2), pages 461-467, June.
    5. Ken-Ichi Shimomura, 1997. "Quasi-Cores in Bargaining Sets," International Journal of Game Theory, Springer;Game Theory Society, vol. 26(3), pages 283-302.
    6. Hirota, Masayoshi, 1985. "Global stability in a class of markets with three commodities and three consumers," Journal of Economic Theory, Elsevier, vol. 36(1), pages 186-192, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Anjan Mukherji, 2012. "The second fundamental theorem of positive economics," International Journal of Economic Theory, The International Society for Economic Theory, vol. 8(2), pages 125-138, June.
    2. Emanuela Randon & Peter Simmons, 2017. "A top dog tale with preference complementarities," Journal of Economics, Springer, vol. 120(1), pages 47-63, January.
    3. Mukherji, Anjan, 2007. "Global stability condition on the plane: A general law of demand," Journal of Economic Theory, Elsevier, vol. 134(1), pages 583-592, May.
    4. Mukherji, Anjan, 2010. "Stability of the Market Economy in the Presence of Diverse Economic Agents," Working Papers 8, JICA Research Institute.
    5. Anjan Mukherji, 2003. "Competitive Equilibria: Convergence, Cycles or Chaos," ISER Discussion Paper 0591, Institute of Social and Economic Research, Osaka University.
    6. Emiko Fukuda & Shuhei Sato & Junyi Shen & Ken-Ichi Shimomura & Takehiko Yamato, 2020. "Walrasian Dynamics with Endowment Changes: The Gale Example in a Laboratory Market Experiment," Discussion Paper Series DP2020-20, Research Institute for Economics & Business Administration, Kobe University, revised Apr 2021.
    7. Crockett, Sean & Spear, Stephen & Sunder, Shyam, 2008. "Learning competitive equilibrium," Journal of Mathematical Economics, Elsevier, vol. 44(7-8), pages 651-671, July.
    8. Paul Oslington, 2012. "General Equilibrium: Theory and Evidence," The Economic Record, The Economic Society of Australia, vol. 88(282), pages 446-448, September.
    9. Sean Crockett & Daniel Friedman & Ryan Oprea, 2021. "Naturally Occurring Preferences And General Equilibrium: A Laboratory Study," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 62(2), pages 831-859, May.
    10. E. Randon & P. Simmons, 2012. "A Top Dog Tale with Preference Rigidities," Working Papers wp839, Dipartimento Scienze Economiche, Universita' di Bologna.
    11. Ken-Ichi Shimomura & Takehiko Yamato, 2011. "Impact of Ethnicities on Market Outcome: Results of Market Experiments in Kenya," Discussion Paper Series DP2011-10, Research Institute for Economics & Business Administration, Kobe University.
    12. W D A Bryant, 2009. "General Equilibrium:Theory and Evidence," World Scientific Books, World Scientific Publishing Co. Pte. Ltd., number 6875.
    13. Benjamin J. Gillen & Masayoshi Hirota & Ming Hsu & Charles R. Plott & Brian W. Rogers, 2021. "Divergence and convergence in Scarf cycle environments: experiments and predictability in the dynamics of general equilibrium systems," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 71(3), pages 1033-1084, April.
    14. Crockett, Sean & Friedman, Daniel & Oprea, Ryan, 2017. "Aggregation and convergence in experimental general equilibrium economies constructed from naturally occurring preferences," Discussion Papers, Research Professorship Market Design: Theory and Pragmatics SP II 2017-501, WZB Berlin Social Science Center.
    15. Benaïm, Michel & Hofbauer, Josef & Hopkins, Ed, 2009. "Learning in games with unstable equilibria," Journal of Economic Theory, Elsevier, vol. 144(4), pages 1694-1709, July.
    16. Alok Kumar & Martin Shubik, 2004. "Variations on the Theme of Scarf's Counter-Example," Computational Economics, Springer;Society for Computational Economics, vol. 24(1), pages 1-19, August.
    17. Cason, Timothy N. & Friedman, Daniel & Hopkins, Ed, 2010. "Testing the TASP: An experimental investigation of learning in games with unstable equilibria," Journal of Economic Theory, Elsevier, vol. 145(6), pages 2309-2331, November.
    18. Herings, P.J.J., 2024. "Globally and Universally Convergent Price Adjustment Processes," Other publications TiSEM 12dc4fc2-19e8-4a8c-b2ff-2, Tilburg University, School of Economics and Management.
    19. Peter Bossaerts & Charles Plott, 2004. "Basic Principles of Asset Pricing Theory: Evidence from Large-Scale Experimental Financial Markets," Review of Finance, Springer, vol. 8(2), pages 135-169.
    20. Timothy N. Cason & Daniel Friedman & Ed Hopkins, 2021. "An Experimental Investigation of Price Dispersion and Cycles," Journal of Political Economy, University of Chicago Press, vol. 129(3), pages 789-841.

    More about this item

    Keywords

    Exchange economy; Instability; Quasilinear utility;
    All these keywords.

    JEL classification:

    • D5 - Microeconomics - - General Equilibrium and Disequilibrium

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ebl:ecbull:eb-11-00252. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: John P. Conley (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.