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On Non-Tatonnement Processes

Author

Listed:
  • Sambracos, Evangelos
  • Yannelis, Dimitris

Abstract

The objective of this study is to examine the stability of a general equilibrium model in which trade takes place at non-equilibrium prices. Quantity constraints are perceived by the traders and effective demands and supplies are explicitly derived from utility and profit maximization. Therefore, spillover effects are taken into account whenever a quantity constraint is binding. Furthermore, we resolve the problem of bankruptcy as follows. Traders, in maximizing their objective functions, plan at the same time not to go bankrupt, by constraining their behavior explicitly. Such a constrained behavior assigns to money a role as a medium of exchange. The system is shown to be globally stable, when both prices and quantity constraints adjust in disequilibrium.

Suggested Citation

  • Sambracos, Evangelos & Yannelis, Dimitris, 1993. "On Non-Tatonnement Processes," MPRA Paper 52125, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:52125
    as

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    File URL: https://mpra.ub.uni-muenchen.de/52125/1/MPRA_paper_52125.pdf
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    References listed on IDEAS

    as
    1. Champsaur, Paul & Dreze, Jacques H & Henry, Claude, 1977. "Stability Theorems with Economic Applications," Econometrica, Econometric Society, vol. 45(2), pages 273-294, March.
    2. E. C. H. Veendorp, 1975. "Stable Spillovers among Substitutes," Review of Economic Studies, Oxford University Press, vol. 42(3), pages 445-456.
    3. Fisher, Franklin M, 1981. "Stability, Disequilibrium Awareness, and the Perception of New Opportunities," Econometrica, Econometric Society, vol. 49(2), pages 279-317, March.
    4. Abraham, Haim & Whittaker, John, 1989. "Is Dynamic Stability of Walrasian Equilibrium Achieved through Falling Target Utilities?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 30(3), pages 507-511, August.
    5. MacKay, Robert J & Weber, Warren E, 1977. "Consumer Behavior and Quantity Constraints: Some Implications for Monetary Theory," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 9(1), pages 21-31, February.
    6. Eckalbar, John C, 1979. "Global Stability with Spillovers," The Economic Record, The Economic Society of Australia, vol. 55(149), pages 172-178, June.
    7. Grandmont, Jean-Michel, 1993. "Temporary general equilibrium theory," Handbook of Mathematical Economics,in: K. J. Arrow & M.D. Intriligator (ed.), Handbook of Mathematical Economics, edition 4, volume 2, chapter 19, pages 879-922 Elsevier.
    8. Eckalbar, John C, 1980. "The Stability of Non-Walrasian Processes: Two Examples," Econometrica, Econometric Society, vol. 48(2), pages 371-386, March.
    9. Franklin M. Fisher, 1978. "Quantity Constraints, Spillovers and the Hahn Process," Review of Economic Studies, Oxford University Press, vol. 45(1), pages 19-31.
    10. Varian, Hal R., 1975. "On persistent disequilibrium," Journal of Economic Theory, Elsevier, vol. 10(2), pages 218-228, April.
    11. Grossman, Herschel I, 1971. "Money, Interest, and Prices in Market Disequilibrium," Journal of Political Economy, University of Chicago Press, vol. 79(5), pages 943-961, Sept.-Oct.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    General equilibrium; utility; profit maximization; spillover effects.;

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

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