Multiple Equilibria in Exchange Economies with Homothetic, Nearly Identical Preferences

Steven Gjerstad ()

Working Papers from Minnesota - Center for Economic Research

Abstract: For agents with identical homothetic preferences (but possibly different endowments), aggregate excess demand can be derived from maximization of a utility function of a representative agent whose endowment is the sum of the individual's endowments. Such an economy has a unique equilibrium. In this paper, a metric p is defined on the set P of preference relations representable by CES utility functions. It is then shown that there are agentswhose preference relations in P are arbitrarily close to one another in t he metric p, and there are endowments for these agents, such that the resulting exchange economy has a multiple Walrasian equilibria.

Keywords: ECONOMIC; EQUILIBRIUM (search for similar items in EconPapers)
JEL-codes: D51 (search for similar items in EconPapers)
Date: 1996
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Persistent link: http://EconPapers.repec.org/RePEc:fth:minner:288

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