Equilibria without the survival assumption: a non-standard analysis approach

A. Konovalov and Valeri Marakulin ()

No 34, Discussion Paper from Tilburg University, Center for Economic Research

Abstract: It is well known that an equilibrium in the Arrow-Debreu model may fail to exist if a very restrictive condition called the survival assumption is not satisfied. We study two approaches that allow for the relaxation of this condition. Danilov and Sotskov (1980), and Florig (1998a) developed a concept of a generalized equilibrium based on a notion of hierarchic prices. Marakulin (1988, 1990) proposed a concept of an equilibrium with non-standard prices. In this paper, we establish the equivalence between non-standard and hierarchic equilibria. Furthermore, we show that the set of non-standard equilibria coincides with the fuzzy rejective core of an economy and is generically finite for any specified system of dividends.

New Economics Papers: this item is included in nep-fmk
Date: 2001
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