Selecting a Unique Competitive Equilibrium with Default Penalties

Qin, Cheng-Zhong and Martin Shubik
Additional contact information
Qin, Cheng-Zhong: Dept. of Economics, UC, Santa Barbara

No 1712, Cowles Foundation Discussion Papers from Cowles Foundation, Yale University

Abstract: The enlargement of the general-equilibrium structure to allow default subject to penalties results in a construction of a simple mechanism for selecting a unique competitive equilibrium. We consider economies for which a common credit money can be applied to uniquely select any competitive equilibrium with suitable default penalties. We identify two classes of such economies. One consists of economies with utility functions being homogeneous of degree 1; the other consists of economies with the number of consumers equal to the number of commodities and traders having quasi-linear utility functions with respect to different commodities.

Keywords: Competitive equilibrium; Credit mechanism; Marginal utility of income; Welfare economics (search for similar items in EconPapers)
JEL-codes: D5 C72 E4 (search for similar items in EconPapers)
Date: 2009-07
View list of references

Downloads: (external link)
http://cowles.econ.yale.edu/P/cd/d17a/d1712.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:cwl:cwldpp:1712

Ordering information: This working paper can be ordered from
Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA
The price is None.

Access Statistics for this paper

More papers in Cowles Foundation Discussion Papers from Cowles Foundation, Yale University
Address: Yale University, Box 208281, New Haven, CT 06520-8281 USA
Contact information at EDIRC.
Series data maintained by Glena Ames ().