Endogenously determined price rigidities (*)
There exists an extensive literature about economies with price rigidities, where some constraints on the set of admissible price systems are exogenously given. In this paper a general equilibrium model extended by a political system is described where the price rigidities are endogenously chosen by political candidates. Sufficient conditions for the existence of a mixed strategy and a pure strategy equilibrium are given. Finally an example is discussed, where in equilibrium both political candidates propose price rigidities excluding the Walrasian equilibrium price system.
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Volume (Year): 9 (1997)
Issue (Month): 3 ()
|Note:||Received: September 15, 1994; revised version October 18, 1995|
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|Order Information:||Web: http://www.springer.com/economics/economic+theory/journal/199/PS2|