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Monotone comparative statics in general equilibrium

Author

Listed:
  • Francesco Ruscitti

    (John Cabot University, Department of Economics and Social Sciences)

  • Ram Sewak Dubey

    (Montclair State University)

Abstract

Under certain conditions on the excess demand function, it is shown that the set of equilibrium prices coincides with the set of maximizers of a potential function. Therefore, monotone comparative statics techniques can be employed to study how equilibrium prices change when there are shocks to the parameters of the model. As a by-product of our analysis, it turns out that the set of equilibrium prices is a convex lattice.

Suggested Citation

  • Francesco Ruscitti & Ram Sewak Dubey, 2016. "Monotone comparative statics in general equilibrium," Economics Bulletin, AccessEcon, vol. 36(1), pages 187-197.
    • Handle: RePEc:ebl:ecbull:eb-15-00609
    as

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    References listed on IDEAS

    as
    1. Mantel, Rolf R., 1974. "On the characterization of aggregate excess demand," Journal of Economic Theory, Elsevier, vol. 7(3), pages 348-353, March.
    2. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
    3. Milgrom, Paul & Shannon, Chris, 1994. "Monotone Comparative Statics," Econometrica, Econometric Society, vol. 62(1), pages 157-180, January.
    4. Sonnenschein, Hugo, 1973. "Do Walras' identity and continuity characterize the class of community excess demand functions?," Journal of Economic Theory, Elsevier, vol. 6(4), pages 345-354, August.
    5. John H. Nachbar, 2002. "General Equilibrium Comparative Statics," Econometrica, Econometric Society, vol. 70(5), pages 2065-2074, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Monotone comparative statics; Potential function; Supermodularity; Walrasian equilibrium; Weak gross substitution property;
    All these keywords.

    JEL classification:

    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling

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