SFB 303 Discussion Paper No. A - 147

Author: Lehmann-Waffenschmidt, Marco
Title: On the Equilibrium Price Set of a Continuous Perturbation of Exchange Economies
Abstract: The decomposition result for market excess demand functions developed by H. Sonnenschein and advanced by G. Debreu struck the economics profession in the early seventies. Like all succeeding extensions of this result also A. Mas-Colell's equilibria preserving extensions from 1977 refers to the static exchange model. Leaving the static approach recent reasearch work by Mas-Colell and by the author has drawn attention to continuous perturbations of economies and has shown a certain general global structure property of their equilibrium sets. Generalizing Mas-Colell's equilibria preserving decomposition result from 1977 to continuous perturbations the present study shows that the addressed global structure property in fact is the only one which generally holds. This result throws new light on the graph of the equilibrium price correspondence. Particularly, it generalizes a central result on local surjectiveness of the equilibrium price correspondence by B. Allen (1981). Furthermore, our findings clarify the degree of indeterminateness of the exchange model on the 'kinetic' level which lies between comparative statics and dynamics.
Keywords: decomposition result, equilibrium set of a perturbation of economies, global structure property, kinetic approach
Creation-Date: May 1988
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