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The Walrasian Output Beats the Market

Author

Listed:
  • Antonio J. Morales

    (Department of Economic Theory, Universidad de Málaga)

  • Gonzalo Fernández-de-Córdoba

    (Department of Economic Theory, Universidad de Málaga)

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.

Suggested Citation

  • Antonio J. Morales & Gonzalo Fernández-de-Córdoba, 2010. "The Walrasian Output Beats the Market," Working Papers 2010-08, Universidad de Málaga, Department of Economic Theory, Málaga Economic Theory Research Center.
    • Handle: RePEc:mal:wpaper:2010-8
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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 equilibrium; Evolutionary foundation;

    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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