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Walras and Dividends Equilibrium with Possibly Satiated Consumers

  • Nizar Allouch


    (Queen Mary, University of London)

  • Cuong Le Van


    (Paris 1 Pantheon-Sorbonne, CNRS)

The main contribution of the paper is to provide a weaker non-satiation assumption than the one commonly used in the literature to ensure the existence of competitive equilibrium. Our assumption allows for satiation points inside the set of individually feasible consumptions, provided that the consumer has satiation points available to him outside this set. As a result, we show the concept of equilibrium with dividends (See Aumann and Dreze (1986), Mas-Collel (1992)) is pertinent only when the set of satiation points is included in the set of individually feasible consumptions. Our economic motivation stems from the fact that in decentralized markets, increasing the incomes of consumers through dividends, if it is possible, is costly since it involves the intervention of a social planner. Then, we show, in particular, how in securities markets our weak nonsatiation assumption is satisfied by Werner's (1987) assumption.

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Paper provided by Queen Mary University of London, School of Economics and Finance in its series Working Papers with number 555.

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Date of creation: Mar 2006
Date of revision:
Handle: RePEc:qmw:qmwecw:wp555
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  1. Dana, Rose-Anne & Le Van, Cuong & Magnien, François, 1999. "On the Different Notions of Arbitrage and Existence of Equilibrium," Economics Papers from University Paris Dauphine 123456789/6228, Paris Dauphine University.
  2. LE VAN, Cuong & BA MINH, Nguyen, 2004. "No-arbitrage condition and existence of equilibrium with dividends," CORE Discussion Papers 2004034, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Cornet, Bernard & Topuzu, Mihaela & Yildiz, Aysegul, 2003. "Equilibrium theory with a measure space of possibly satiated consumers," Journal of Mathematical Economics, Elsevier, vol. 39(3-4), pages 175-196, June.
  4. AUMANN, Robert J. & DREZE, Jacques H., . "Values of markets with satiation or fixed prices," CORE Discussion Papers RP 722, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. Makarov, V. L., 1981. "Some results on general assumptions about the existence of economic equilibrium," Journal of Mathematical Economics, Elsevier, vol. 8(1), pages 87-99, March.
  6. Page Jr., Frank H. & Wooders, Myrna Holtz, 1996. "A necessary and sufficient condition for the compactness of individually rational and feasible outcomes and the existence of an equilibrium," Economics Letters, Elsevier, vol. 52(2), pages 153-162, August.
  7. Kajii, Atsushi, 1996. "How to discard non-satiation and free-disposal with paper money," Journal of Mathematical Economics, Elsevier, vol. 25(1), pages 75-84.
  8. Dreze, Jacques H. & Muller, Heinz, 1980. "Optimality properties of rationing schemes," Journal of Economic Theory, Elsevier, vol. 23(2), pages 131-149, October.
  9. Alexander Konovalov, 2005. "The core of an economy with satiation," Economic Theory, Springer, vol. 25(3), pages 711-719, 04.
  10. Allouch, Nizar & Le Van, Cuong & Page, Jr. Frank H., 2001. "The geometry of arbitrage and the existence of competitive equilibrium," The Warwick Economics Research Paper Series (TWERPS) 598, University of Warwick, Department of Economics.
  11. Werner, Jan, 1987. "Arbitrage and the Existence of Competitive Equilibrium," Econometrica, Econometric Society, vol. 55(6), pages 1403-18, November.
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