Title: Francis Ysidro Edgeworth: Perfect Competition and the Core
Abstract: Edgeworth's single most important contribution to economic theory, his analysis of barter under imperfect and perfect competition, or in today's terminology "his Limit Theorem of the core for a sequence of replica economies" is discussed in the present paper. The important and novel point of Edgeworth's analysis is that he explicitly models the 'degree of competition` by the number of agents who participate in the economy. 'Perfect competition` prevails only 'in the limit`; thus, 'perfect competition` is modelled as an asymptotic property of a sequence of exchange economies. The concept of a competitive equilibrium (Walras) is based on the implicit assumption of 'perfect competition`. Since an economy with a finite number of agents is not perfectly competitive, Edgeworth introduced a new concept of equilibrium; the 'final settlements` or, in today's language, the 'core`. The 'Limit Theorem` expresses that under 'perfect competition` these two equilibrium concepts coincide.
Creation-Date: November 1992
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