Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/79181
Authors: 
Ma, Jinpeng
Nie, Fusheng
Year of Publication: 
2002
Series/Report no.: 
Working Papers, Department of Economics, Rutgers, The State University of New Jersey 2002,07
Abstract: 
This paper studies an exchange economy with indivisibilities. Our main goal is to see if a price system can function well in an economy (e.g., an economy with complementary preferences) that does not have a Walrasian equilibrium. We study the price adjustment processes governed by the Euler iterative scheme. We show that in an economy that has a Walrasian equilibrium, our price adjustment processes have a common uniform limit that is {\em unique} and converges to a Walrasian equilibrium price vector in finite time. Surprisingly, in an economy that does not have a Walrasian equilibrium, our price adjustment processes also have a common uniform limit that is {\em unique} and converges to a market equilibrium price vector in finite time. Moreover, market equilibrium prices coincide with Walrasian equilibrium ones in an economy that has a Walrasian equilibrium. Further, there are no prices other than the Walrasian or market equilibrium ones that have such a property of global stability.
Subjects: 
Walrasian
JEL: 
D71
Document Type: 
Working Paper

Files in This Item:
File
Size
318.04 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.