Walras Equilibrium with Coordination

Birgit Grodal and Karl Vind

No 00-18, Discussion Papers from University of Copenhagen. Department of Economics

Abstract: We consider a pure exchange economy with private ownership in which consumers have interdependent preferences. Hence, consumers’ preferences are defined on the states of the economy. In a Walras equilibrium for such an economy, it may, of course, be possible for two or more consumers to simultaneously change their net trades and thereby obtain a preferred state.We use the concept of coordination introduced by Vind (1983) to define an exogenously given coordination structure in the economy and define a new equilibrium concept, Walras equilibrium with coordination. In such an equilibrium individual consumers take prices and initial endowments as given, and consumers do not expect to be able to obtain a preferred state when they coordinate their choise of net trades. By using the existence theorem for an equilibrium in a social system with oordination, we set conditions for the existence of a Walras equilibrium with coordination.

Keywords: Walras Equilibrium with Coordination; Coordination; Social System, Households; Incomplete Markets (search for similar items in EconPapers)
JEL-codes: D11 D50 D62 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2000-09
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Persistent link: https://EconPapers.repec.org/RePEc:kud:kuiedp:0018

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