Dispersed excess demands, the weak axiom and uniqueness of equilibrium
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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- Wolfgang Härdle & Werner Hildenbrand & Michael Jerison, 1989.
"Empirical Evidence on the Law of Demand,"
Discussion Paper Serie A
264a, University of Bonn, Germany.
- Hildenbrand, Werner & Kneip, Alois, 1993. "Family expenditure data, heteroscedasticity and the Law of Demand," Ricerche Economiche, Elsevier, vol. 47(2), pages 137-165, June.
- Marhuenda, F, 1995. "Distribution of Income and Aggregation of Demand," Econometrica, Econometric Society, vol. 63(3), pages 647-66, May.
- John K.-H. Quah, 1997. "The Law of Demand when Income Is Price Dependent," Econometrica, Econometric Society, vol. 65(6), pages 1421-1442, November.
- 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.
- 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.
- 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.
- Jerison, Michael, 1994. "Optimal Income Distribution Rules and Representative Consumers," Review of Economic Studies, Wiley Blackwell, vol. 61(4), pages 739-71, October.
- Hildenbrand, Werner, 1989. "The Weak Axiom of Revealed Preference for Market Demand Is Strong," Econometrica, Econometric Society, vol. 57(4), pages 979-85, July.
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