Comparative Statics of the Weak Axiom
This paper examines the comparative statics of Walrasian economies with excess demand functions which obey the weak axiom. We show that in these economies there is a precise sense in which goods that are in excess supply (demand) after some perturbation will experience a fall (rise) in its price. We apply this to an exchange economy with additive utility functions, which can be interpreted as a financial economy with von Neumann-Morgenstern utility functions. We show that when the subjective probabilities which agents attribute to a particular state falls, so will the price of consumption in that state. Another interesting issue is the impact of changes to the endowment on the equilibrium price. We develop conditions under which, for an exchange economy, this equilibrium map - from endowment to equilibrium price - will obey the weak axiom and another stronger, monotonicity property.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- 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.
- Michael Jerison, 1998. "Dispersed Excess Demands, the Weak Axiom and Uniqueness of Equilibrium," Discussion Papers 98-03, University at Albany, SUNY, Department of Economics.
- John K.-H. Quah, 2000. "The Monotonicity of Individual and Market Demand," Econometrica, Econometric Society, vol. 68(4), pages 911-930, July.
- Quah, J-K-H, 1996. "The Monotonicity of Individual and Market Demand," Economics Papers 127, Economics Group, Nuffield College, University of Oxford.
- John K.-H. Quah, 2000. "The Weak Axiom and Comparative Statics," Econometric Society World Congress 2000 Contributed Papers 0437, Econometric Society.
- Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
- Shafer, Wayne & Sonnenschein, Hugo, 1993. "Market demand and excess demand functions," Handbook of Mathematical Economics,in: K. J. Arrow & M.D. Intriligator (ed.), Handbook of Mathematical Economics, edition 4, volume 2, chapter 14, pages 671-693 Elsevier.
- Hildenbrand, Werner, 1983. "On the "Law of Demand."," Econometrica, Econometric Society, vol. 51(4), pages 997-1019, July.
- John K.-H. Quah, 1997. "The Law of Demand when Income Is Price Dependent," Econometrica, Econometric Society, vol. 65(6), pages 1421-1442, November.
- John H. Nachbar, 2002. "General Equilibrium Comparative Statics," Econometrica, Econometric Society, vol. 70(5), pages 2065-2074, September.
- Polterovich, Victor & Mityushin, Leonid, 1978. "Criteria for Monotonicity of Demand Functions," MPRA Paper 20097, University Library of Munich, Germany. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:nuf:econwp:0103. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Maxine Collett)
If references are entirely missing, you can add them using this form.