Walrasian equilibrium as limit of a competitive equilibrium without divisible goods

Michael Florig and Jorge Rivera Cayupi

Working Papers from University of Chile, Department of Economics

Abstract: We study economies where all commodities are indivisible at the individual level, but per- fectly divisible at the aggregate level of the economy. Under the survival assumption, we show that any rationing equilibrium (Florig and Rivera [7]) in the discrete economy converges to a Walras equilibrium of the limit economy when the level of indivisibility becomes small. If the survival assumption is not satisfied, then rationing equilibrium converges to a hierarchic equilibrium (Florig [5]).

Pages: 14 pages
Date: 2015-05
New Economics Papers: this item is included in nep-com and nep-mic
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