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Berge's maximum theorem with two topologies on the action set

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  • Horsley, Anthony
  • Wrobel, Andrew J.
  • Van Zandt, Timothy

Abstract

We give variants on Berge's Maximum Theorem in which the lower and the upper semicontinuities of the preference relation are assumed for two different topologies on the action set, i.e., the set of actions availabe a priori to the decision-maker (e.g. a household with its consumption set). Two new uses are pointed to. One result, stated here without a detailed proof, is the norm-to-weak* continuity of consumer demand as a function of prices (a property pointed to in existing literature but without proof or precise formulation). This improves significantly upon an earlier demand continuity result which, with the extremally strong 'finite' topology on the price space, is of limited interest other than as a vehicle for an equilibrium existence proof. With the norm topology on the price space, our demand continuity result acquires an independent significance - particularly for practical implementations of the equilibrium solution. The second application referred to establishes the continuity of the optimal plan as a function of the decision-maker's information (represented by a field of events in a probability spcace of states).

Suggested Citation

  • Horsley, Anthony & Wrobel, Andrew J. & Van Zandt, Timothy, 1998. "Berge's maximum theorem with two topologies on the action set," LSE Research Online Documents on Economics 19358, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:19358
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    File URL: http://eprints.lse.ac.uk/19358/
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    References listed on IDEAS

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    1. Florenzano, Monique, 1983. "On the existence of equilibria in economies with an infinite dimensional commodity space," Journal of Mathematical Economics, Elsevier, vol. 12(3), pages 207-219, December.
    2. Bewley, Truman F., 1972. "Existence of equilibria in economies with infinitely many commodities," Journal of Economic Theory, Elsevier, vol. 4(3), pages 514-540, June.
    3. BEWLEY, Truman F., 1972. "Existence of equilibria in economies with infinitely many commodities," LIDAM Reprints CORE 122, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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    Cited by:

    1. Anthony Horsley & Andrew J Wrobel, 1999. "Efficiency Rents of Storage Plants in Peak-Load Pricing, II: Hydroelectricity - (Now published as Efficiency rents of hydroelectric storage plants in continuous-time peak-load pricing, in The Current ," STICERD - Theoretical Economics Paper Series 372, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    2. Van Zandt, Timothy, 2002. "Information, measurability, and continuous behavior," Journal of Mathematical Economics, Elsevier, vol. 38(3), pages 293-309, November.
    3. Anthony Horsley & Andrew J Wrobel, 1999. "The Density Form of Equilibrium Prices in Continuous Time and Boiteuxs Solution to the Shifting-Peak Problem- (Now published as Boiteuxs solution to the shifting-peak problem and the equilibrium price," STICERD - Theoretical Economics Paper Series 371, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    4. Horsley, Anthony & Wrobel, Andrew J., 2002. "Efficiency rents of pumped-storage plants and their uses for operation and investment decisions," Journal of Economic Dynamics and Control, Elsevier, vol. 27(1), pages 109-142, November.
    5. Anthony Horsley & Andrew J Wrobel, 2005. "Characterizations of long-run producer optima and the short-runapproach to long-run market equilibrium: a general theory withapplications to peak-load pricing," STICERD - Theoretical Economics Paper Series 490, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    6. Timothy Van Zandt & Kaifu Zhang, 2011. "A theorem of the maximin and applications to Bayesian zero-sum games," International Journal of Game Theory, Springer;Game Theory Society, vol. 40(2), pages 289-308, May.

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    More about this item

    Keywords

    Berge's Maximum Theorem; demand continuity;

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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