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Multiple Equilibria in Exchange Economies with Homothetic, Nearly Identical Preferences

Author

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  • Gjerstad, S.

Abstract

For agents with identical homothetic preferences (but possibly different endowments), aggregate excess demand can be derived from maximization of a utility function of a representative agent whose endowment is the sum of the individual's endowments. Such an economy has a unique equilibrium. In this paper, a metric p is defined on the set P of preference relations representable by CES utility functions. It is then shown that there are agentswhose preference relations in P are arbitrarily close to one another in t he metric p, and there are endowments for these agents, such that the resulting exchange economy has a multiple Walrasian equilibria.

Suggested Citation

  • Gjerstad, S., 1996. "Multiple Equilibria in Exchange Economies with Homothetic, Nearly Identical Preferences," Papers 288, Minnesota - Center for Economic Research.
    • Handle: RePEc:fth:minner:288
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    Citations

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    Cited by:

    1. Kubler, Felix & Schmedders, Karl, 2010. "Competitive equilibria in semi-algebraic economies," Journal of Economic Theory, Elsevier, vol. 145(1), pages 301-330, January.
    2. Giménez, Eduardo L., 2022. "Offer curves and uniqueness of competitive equilibrium," Journal of Mathematical Economics, Elsevier, vol. 98(C).
    3. Toda, Alexis Akira, 2017. "Huggett economies with multiple stationary equilibria," Journal of Economic Dynamics and Control, Elsevier, vol. 84(C), pages 77-90.
    4. Bodenstein, Martin, 2010. "Trade elasticity of substitution and equilibrium dynamics," Journal of Economic Theory, Elsevier, vol. 145(3), pages 1033-1059, May.
    5. Bergstrom Theodore C & Shimomura Ken-Ichi & Yamato Takehiko, 2009. "Simple Economies with Multiple Equilibria," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 9(1), pages 1-31, December.
    6. Bodenstein, Martin, 2011. "Closing large open economy models," Journal of International Economics, Elsevier, vol. 84(2), pages 160-177, July.
    7. Li, Xiaoliang & Wang, Dongming, 2014. "Computing equilibria of semi-algebraic economies using triangular decomposition and real solution classification," Journal of Mathematical Economics, Elsevier, vol. 54(C), pages 48-58.
    8. Simina Br^anzei & Fedor Sandomirskiy, 2019. "Algorithms for Competitive Division of Chores," Papers 1907.01766, arXiv.org, revised Jul 2023.

    More about this item

    Keywords

    ECONOMIC EQUILIBRIUM;

    JEL classification:

    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies

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