SFB 303 Discussion Paper No. A - 134

Author: Lehmann-Waffenschmidt, Marco
Title: Existence of Equilibrium in a Multi-Sectoral Model with Quantity Rationing
Abstract: Supportive measures for new high-tech firms are of major concern to current German economic policy. If an economist intends to analyse the effects of such sector specific policy measures in the framework of quantity constrained temporary equilibrium theory, however, it turns out that the totally aggregated macromodel is too rough and the totally disaggregated micromodel is too complicated. It is the main purpose of this study to fill in this gab by providing a multi-sectoral quantity constrained model on an intermediate level of desaggregation. It has the advantage that one can still make use of the well-known two dimensional geometric representation of the macromodel. The existence of equilibrium follows immediately from the application of Brouwer's Fixed Point Theorem to an economically intuitive mapping. Furthermore, iterative application of this mapping itself yields a natural extension of the traditional macro-quantity tâtonnement process.
Keywords: Multi-sectoral, quantity constrained, generalized quantity tâtonement
Creation-Date: October 1987
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