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Characteristics of good and competitive equilibrium

Author

Listed:
  • Damien GAUMONT

    (Université de Paris 2 et ERMES UMR CNRS)

  • Philippe MICHEL

    (IUF, GREQAM, Université de la Méditerranée , EUREQUA Université de Paris 1, and CORE, Louvain-la-Neuve)

Abstract

We analyse the consequences of a change of the characteristics of goods due to new information on the equilibrium of a pure exchange economy with n goods and m agents. Some changes of the characteristics of goods à la Lancaster have a positive effect on utility. In the general competitive equilibrium, some agents gain but others may lose. Nevertheless there is an increase of a linear combination of the utilities of the agents. The different possibilities of gains and losses are explicitly analysed in an example with two goods and two agents.

Suggested Citation

  • Damien GAUMONT & Philippe MICHEL, 2004. "Characteristics of good and competitive equilibrium," Discussion Papers (REL - Recherches Economiques de Louvain) 2004035, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  • Handle: RePEc:ctl:louvre:2004035
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    File URL: http://sites.uclouvain.be/econ/DP/REL/2004035.pdf
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    References listed on IDEAS

    as
    1. Luski, Israel & Wettstein, David, 1994. "The provision of public goods via advertising : Existence of equilibria and welfare analysis," Journal of Public Economics, Elsevier, pages 309-321.
    2. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132-132.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Pure exchange economy; Characteristic of goods; Price determination; Pareto efficiency;

    JEL classification:

    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General

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