EconPapers    
Economics at your fingertips  
 

A Computational Analysis of the Core of a Trading Economy with Three Competitive Equilibria and a Finite Number of Traders

Martin Shubik and Alok Kumar

No 1290, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: In this paper we examine the structure of the core of a trading economy with three competitive equilibria as the number of traders (N) is varied. We also examine the sensitivity of the multiplicity of equilibria and of the core to variations in individual initial endowments. Computational results show that the core first splits into two pieces at N = 5 and then splits a second time into three pieces at N = 12. Both of these splits occur not at a point but as a contiguous gap. As N is increased further, the core shrinks by N = 600 with essentially only the 3 competitive equilibria remaining. We find that the speed of convergence of the core toward the three competitive equilibria is not uniform. Initially, for small N, it is not of the order 1/N but when N is large, the convergence rate is approximately of the order 1/N. Small variations in the initial individual endowments along the price rays to the competitive equilibria make the respective competitive equilibrium (CE) unique and once a CE becomes unique, it remains so for all allocations on the price ray. Sensitivity analysis of the core reveals that in the large part of the endowment space where the competitive equilibrium is unique, the core either converges to the single CE or it splits into two segments, one of which converges to the CE and the other disappears.

Keywords: Core; Multiple competitive equilibria; Speed of convergence; Sensitivity Analysis (search for similar items in EconPapers)
JEL-codes: C62 C71 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-gth
Date: 2001-02
Note: CFP 1135.
References: Add references at CitEc
Citations: Track citations by RSS feed

Published in Games and Economic Behavior (2003), 42(2): 253-266

Downloads: (external link)
http://cowles.yale.edu/sites/default/files/files/pub/d12/d1290.pdf (application/pdf)

Related works:
Working Paper: A Computational Analysis of the Core of a Trading Economy with Three Competitive Equilibria and a Finite Number of Traders (2003) Downloads
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:cwl:cwldpp:1290

Ordering information: This working paper can be ordered from
Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA
The price is None.

Access Statistics for this paper

More papers in Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University Yale University, Box 208281, New Haven, CT 06520-8281 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Matthew Regan ().

 
Page updated 2019-11-09
Handle: RePEc:cwl:cwldpp:1290