Approximating Walrasian Equilibria

Aad Ruiter ()
Additional contact information
Aad Ruiter: University of Amsterdam

Computational Economics, 2020, vol. 55, issue 2, No 9, 577-596

Abstract: Abstract This paper proposes a price adjustment process that converges globally for a set of pure exchange economies, in which each agent has a Constant Elasticity of Substitution utility function. In this process, the auctioneer approximates demand schedules by assuming that each trader has a Cobb–Douglas utility function. The process generates prices that cannot be represented by linear combinations of previous prices, and hence precludes cycles. In the so-called unstable Scarf economies, prices spiral towards the Walrasian equilibrium in the same direction as found by Scarf. Simulation in large scale Scarf economies suggests that the speed of convergence may be polynomial in the size of the economy.

Keywords: Walrasian equilibrium; Scarf examples; CES preferences; Computation; Complexity (search for similar items in EconPapers)
JEL-codes: D51 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s10614-019-09904-z Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:compec:v:55:y:2020:i:2:d:10.1007_s10614-019-09904-z

Ordering information: This journal article can be ordered from
http://www.springer. ... ry/journal/10614/PS2

DOI: 10.1007/s10614-019-09904-z

Access Statistics for this article

Computational Economics is currently edited by Hans Amman

More articles in Computational Economics from Springer, Society for Computational Economics Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().