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The Walrasian output beats the market

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  • Antonio Morales
  • Gonzalo Fernández-de-Córdoba

Abstract

We show that for any market-clearing price, average profits in a symmetric industry cannot exceed the individual profits from the Walrasian output. This immediately implies that a firm itself can guarantee to beat the market by producing the Walrasian output. This property clarifies and generalizes the conditions used in the literature to prove the success of Walrasian behavior from an evolutionary perspective.
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Suggested Citation

  • Antonio Morales & Gonzalo Fernández-de-Córdoba, 2012. "The Walrasian output beats the market," International Journal of Game Theory, Springer;Game Theory Society, vol. 41(1), pages 209-212, February.
    • Handle: RePEc:spr:jogath:v:41:y:2012:i:1:p:209-212
    DOI: 10.1007/s00182-010-0270-6
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    References listed on IDEAS

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    1. Apesteguia, Jose & Huck, Steffen & Oechssler, Jorg, 2007. "Imitation--theory and experimental evidence," Journal of Economic Theory, Elsevier, vol. 136(1), pages 217-235, September.
    2. Schlag, Karl H., 1998. "Why Imitate, and If So, How?, : A Boundedly Rational Approach to Multi-armed Bandits," Journal of Economic Theory, Elsevier, vol. 78(1), pages 130-156, January.
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    More about this item

    Keywords

    Walrasian hypothesis; Evolutionary foundation; Price-taking behavior; C73; D43;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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