Quadratic Concavity and Determinacy of Equilibrium

Chris Shannon and William R. Zame.
Authors registered in the RePEc Author Service: William R. Zame and Chris Shannon ()

No E99-271, Economics Working Papers from University of California at Berkeley

Abstract: One of the central features of classical models of competitive markets is the generic determinacy of competitive equilibria. For smooth economies with a finite number of commodities and a finite number of consumers, almost all initial endowments admit only a finite number of competitive equilibria, and these equilibria vary (locally) smoothly with endowments; thus equilibrium comparative statics are locally determinate.
This paper establishes parallel results for economies with finitely many consumers and infinitely many commodities. The most important new condition we introduce, quadratic concavity, rules out preferences in which goods are perfect substitutes globally, locally, or asymptotically. Our framework is sufficiently general to encompass many of the models that have proved important in the study of continuous-time trading in financial markets, trading over an infinite time horizon, and trading of finely differentiated commodities.

New Economics Papers: this item is included in nep-mic
Date: 1999-12-01
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Related works:
Working Paper: Quadratic Concavity and Determinacy of Equilibrium (2000)
Journal Article: Quadratic Concavity and Determinacy of Equilibrium (2002)
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