Uniqueness of Non-Walrasian Equilibrium in the Macroeconomic Model with Decreasing or Increasing Returns

Paul Madden

The Review of Economic Studies, 1985, vol. 52, issue 4, 703-713

Abstract: A class of three good (output, labour, money), one consumer private ownership economies is studied. With an exogenous number of identical, increasing or decreasing returns firms necessary and sufficient conditions for globally unique, non-trivial, uniform rationing non-Walrasian equilibria are obtained in terms of suitably defined "marginal propensities". Following Weddepohl a non-Walrasian equilibrium at a set of parameters with m firms producing is stable if there is no equilibrium at those parameters with m + 1 firms producing. Under the global uniqueness conditions only trivial stable equilibria occur under decreasing returns; under increasing returns multiple, non-trivial stable equilibria can occur.

Date: 1985
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