Simple Economies with Multiple Equilibria

Ted Bergstrom (), Ken-Ichi Shimomura and Takehiko Yamato
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Ken-Ichi Shimomura: Kobe University
Takehiko Yamato: Tokyo Institute of Technology

No 07-09-08, University of California at Santa Barbara, Economics Working Paper Series from Department of Economics, UC Santa Barbara

Abstract: This paper studies a general class of pure exchange economies that have multiple equilibria, which extend an example presented by Lloyd Shapley and Martin Shubik. For such economies, we find easily verified conditions that determine whether there are multiple equilibria. We also provide simple methods for constructing economies in which arbitrary pre-specified sets of prices are equilibria. These economies have simple comparative statics, since prices at interior competitive equilibrium depend on the parameters of utility but not on the endowment quantities.

Keywords: competive equilibrium; multiple equilibria; Shapley-Shubik; quasi-linear; exchange economy (search for similar items in EconPapers)
Date: 2008-07-09
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Persistent link: http://EconPapers.repec.org/RePEc:cdl:ucsbec:07-09-08

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