Equilibrium in Disequilibrium: A Diagrammatic Exposition

Meenakshi Rajeev ()

Indian Economic Review, 2004, vol. 39, issue 2, 383-392

Abstract: Even when a developing country moves towards a market economy characterised by competitive prices, there are several goods like water, essential food items, infrastructure related goods and so on whose prices cannot be left to the market. When a planner fixes prices of such goods the resulting equilibrium will have to be a rationed equilibrium. This paper discusses one of the most important equilibrium concepts in a disequilibrium situation viz., Benassy equilibrium (1975a,b). This paper provides a diagrammatic frame-work to represent this concept of equilibrium using three dimensional Edgeworth box diagrams.

Keywords: Disequilibrium; Rationing Effective Demand; Perceived Constraint; Edgeworth Box Digram (search for similar items in EconPapers)
JEL-codes: D51 (search for similar items in EconPapers)
Date: 2004
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