A pitchfork bifurcation in the tatonnement process

Venkatesh Bala
Additional contact information
Venkatesh Bala: Department of Economics, McGill University, 855 Sherbrooke St. W., Montreal, CANADA H3A 2T7

Economic Theory, 1997, vol. 10, issue 3, 530 pages

Abstract: This note extends the example of Gale (1963) by considering the continuous time tatonnement process for a class of two agent, two commodity exchange economies, parametrized by a number µ∈(0,1). We demonstrate that as the parameter passes a threshold value µ* the unique, globally stable competitive equilibrium loses local stability while two new locally stable equilibria appear. Intuitively, as µ increases the income effect become increasingly more important relative to substitution effect, and eventually overwhelms the latter. As the parameter µ approaches 1, the economy tends to the example considered by Gale, as does the limiting behavior of the tatonnement.

JEL-codes: C62 D50 (search for similar items in EconPapers)
Date: 1997-09-16
Note: Received: February 28, 1996; revised version August 5, 1996
References: Add references at CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://link.springer.de/link/service/journals/00199/papers/7010003/70100521.pdf (application/pdf)
http://link.springer.de/link/service/journals/0019 ... 10003/70100521.ps.gz (application/postscript)
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:spr:joecth:v:10:y:1997:i:3:p:521-530

Ordering information: This journal article can be ordered from
http://www.springer. ... eory/journal/199/PS2

Access Statistics for this article

Economic Theory is currently edited by Nichoals Yanneils

More articles in Economic Theory from Springer, Society for the Advancement of Economic Theory (SAET) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().