Inconsequential Arbitrage

Frank Page, Myrna Wooders and Paulo Monteiro

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: We introduce the concept of inconsequential arbitrage and, in the context of a model allowing short-sales and half-lines in indifference surfaces, we prove that inconsequential arbitrage is sufficient for existence of equilibrium. With a slightly stronger condition of local nonsatiation than required for existence of equilibrium and with a mild uniformity condition on arbitrage opportunities, we show that the existence of a pareto-optimal allocation implies inconsequential arbitrage, implying that inconsequential arbitrage is necessary and sufficient for existence of an equilibrium.

Keywords: ARBITRAGE; ALLOCATIONS; EQUILIBRIUM (search for similar items in EconPapers)
JEL-codes: J51 J52 (search for similar items in EconPapers)
Pages: 36 pages
Date: 1999
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Citations: View citations in EconPapers (18)

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Related works:
Journal Article: Inconsequential arbitrage (2000)
Working Paper: Inconsequential arbitrage (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:561

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