On the instability of competitive equilibrium: a further example

Junichi Minagawa ()
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Junichi Minagawa: Part-time Lecturer, Tokyo University of Foreign Studies

Economics Bulletin, 2012, vol. 32, issue 1, 80-85

Abstract: It is shown that a Walrasian price adjustment process fails to converge to an equilibrium in an exchange economy with three consumers and three commodities, where each consumer has a quasilinear utility function, desires only two commodities, and demands positive amounts of both commodities. The instability is due to weak substitution effects in addition to asymmetrical income effects.

Keywords: Exchange economy; Instability; Quasilinear utility (search for similar items in EconPapers)
JEL-codes: D5 (search for similar items in EconPapers)
Date: 2012-01-13
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