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Existence of competitive equilibrium when incomes may be zero (*)

Author

Listed:
  • J. Whittaker

    (Economics Division, Staffordshire University, Leek Rd., Stoke-on-Trent ST4 2DF, ENGLAND)

  • H. Abraham

    (Department of Economics, University of Cape Town, Rondebosch 7700, SOUTH AFRICA)

  • D. R. Smart

    (Department of Mathematics, University of Cape Town, Rondebosch 7700, SOUTH AFRICA)

Abstract

In a pure exchange economy, there exists a price vector which is a quasi-equilibrium (Debreu 1962), but this may not be a competitive equilibrium if some individuals' demand functions are discontinuous because their incomes may be zero. We show nonetheless, in a pure exchange economy with free disposal, that there is a sequence of prices approaching the quasi-equilibrium along which total excess demands tend to a non-positive limit.

Suggested Citation

  • J. Whittaker & H. Abraham & D. R. Smart, 1996. "Existence of competitive equilibrium when incomes may be zero (*)," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 8(1), pages 177-182.
    • Handle: RePEc:spr:joecth:v:8:y:1996:i:1:p:177-182
    Note: Received: August 25, 1994; revised version May 9, 1995
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