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Dispersed excess demands, the weak axiom and uniqueness of equilibrium

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  • Jerison, Michael

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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  • Jerison, Michael, 1999. "Dispersed excess demands, the weak axiom and uniqueness of equilibrium," Journal of Mathematical Economics, Elsevier, vol. 31(1), pages 15-48, February.
  • Handle: RePEc:eee:mateco:v:31:y:1999:i:1:p:15-48
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    References listed on IDEAS

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    1. Michael Jerison, 1994. "Optimal Income Distribution Rules and Representative Consumers," Review of Economic Studies, Oxford University Press, vol. 61(4), pages 739-771.
    2. 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 971-978, September.
    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. Hildenbrand, Werner, 1989. "The Weak Axiom of Revealed Preference for Market Demand Is Strong," Econometrica, Econometric Society, vol. 57(4), pages 979-985, July.
    5. Hardle, Wolfgang & Hildenbrand, Werner & Jerison, Michael, 1991. "Empirical Evidence on the Law of Demand," Econometrica, Econometric Society, vol. 59(6), pages 1525-1549, November.
    6. Marhuenda, F, 1995. "Distribution of Income and Aggregation of Demand," Econometrica, Econometric Society, vol. 63(3), pages 647-666, May.
    7. Hildenbrand, Werner & Kneip, Alois, 1993. "Family expenditure data, heteroscedasticity and the Law of Demand," Ricerche Economiche, Elsevier, vol. 47(2), pages 137-165, June.
    8. Freixas, Xavier & Mas-Colell, Andreu, 1987. "Engel Curves Leading to the Weak Axiom in the Aggregate," Econometrica, Econometric Society, vol. 55(3), pages 515-531, May.
    9. John K.-H. Quah, 1997. "The Law of Demand when Income Is Price Dependent," Econometrica, Econometric Society, vol. 65(6), pages 1421-1442, November.
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    Cited by:

    1. Brighi, Luigi, 2004. "A stronger criterion for the Weak Weak Axiom," Journal of Mathematical Economics, Elsevier, vol. 40(1-2), pages 93-103, February.
    2. John Quah, 2006. "Weak axiomatic demand theory," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 29(3), pages 677-699, November.
    3. Quah, John K.-H., 2008. "The existence of equilibrium when excess demand obeys the weak axiom," Journal of Mathematical Economics, Elsevier, vol. 44(3-4), pages 337-343, February.
    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. Quah, John K.-H., 2008. "The existence of equilibrium when excess demand obeys the weak axiom," Journal of Mathematical Economics, Elsevier, vol. 44(3-4), pages 337-343, February.

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