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Stability of a competitive economy: A reconsideration
Author(s) -
Mukherji Anjan
Publication year - 2008
Publication title -
international journal of economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 11
eISSN - 1742-7363
pISSN - 1742-7355
DOI - 10.1111/j.1742-7363.2008.00073.x
Subject(s) - economics , distribution (mathematics) , stability (learning theory) , competitive equilibrium , mathematical economics , process (computing) , point (geometry) , econometrics , microeconomics , mathematics , computer science , mathematical analysis , geometry , machine learning , operating system
Negishi (1962) suggested that price adjustment was a means of attaining a particular optimum rather than an equilibrium; this provides the starting point for the present paper. Using a gradient process to arrive at an optimum, the paper shows that with proper distribution of endowments, this process may be considered to be an actual price adjustment process. The role of a proper distribution is investigated further and related to the existing published literature. It is also shown that if the distribution of endowments satisfies certain regularity features then the equilibrium will be globally stable under the classical price adjustment rule where price adjustment is proportional to excess demand.