SFB 303 Discussion Paper No. A - 348

Author: Funk, Peter
Title: Bertrand and Walras Equilibria in Large Economies
Abstract: This paper studies the approximate Bertrand Equilibria of a large but finite economy with free entry for firms and small efficient scales. It establishes the equivalence of the set of regular Walras Equilibria of a limit economy and the set of limits of regular sequences of approximate Bertrand Equilibria. This gives a foundation to the Walrasian hypothesis of perfect competition in explaining why firms behave as if they were price-takers and why they set prices that clear markets.
JEL-Classification-Number: D41, D50, L13
Creation-Date: September, 1991
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