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On Non-Tatonnement Processes

Author

Listed:
  • Sambracos, Evangelos
  • Yannelis, Dimitris

Abstract

The objective of this study is to examine the stability of a general equilibrium model in which trade takes place at non-equilibrium prices. Quantity constraints are perceived by the traders and effective demands and supplies are explicitly derived from utility and profit maximization. Therefore, spillover effects are taken into account whenever a quantity constraint is binding. Furthermore, we resolve the problem of bankruptcy as follows. Traders, in maximizing their objective functions, plan at the same time not to go bankrupt, by constraining their behavior explicitly. Such a constrained behavior assigns to money a role as a medium of exchange. The system is shown to be globally stable, when both prices and quantity constraints adjust in disequilibrium.

Suggested Citation

  • Sambracos, Evangelos & Yannelis, Dimitris, 1993. "On Non-Tatonnement Processes," MPRA Paper 52125, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:52125
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    References listed on IDEAS

    as
    1. Champsaur, Paul & Dreze, Jacques H & Henry, Claude, 1977. "Stability Theorems with Economic Applications," Econometrica, Econometric Society, vol. 45(2), pages 273-294, March.
    2. John C. Eckalbar, 1979. "Global Stability with Spillovers," The Economic Record, The Economic Society of Australia, vol. 55(2), pages 172-178, June.
    3. Eckalbar, John C, 1980. "The Stability of Non-Walrasian Processes: Two Examples," Econometrica, Econometric Society, vol. 48(2), pages 371-386, March.
    4. Franklin M. Fisher, 1978. "Quantity Constraints, Spillovers and the Hahn Process," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 45(1), pages 19-31.
    5. Grossman, Herschel I, 1971. "Money, Interest, and Prices in Market Disequilibrium," Journal of Political Economy, University of Chicago Press, vol. 79(5), pages 943-961, Sept.-Oct.
    6. Fisher, Franklin M, 1981. "Stability, Disequilibrium Awareness, and the Perception of New Opportunities," Econometrica, Econometric Society, vol. 49(2), pages 279-317, March.
    7. repec:bla:ecorec:v:55:y:1979:i:149:p:172-78 is not listed on IDEAS
    8. Grandmont, Jean-Michel, 1993. "Temporary general equilibrium theory," Handbook of Mathematical Economics, in: K. J. Arrow & M.D. Intriligator (ed.), Handbook of Mathematical Economics, edition 4, volume 2, chapter 19, pages 879-922, Elsevier.
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    More about this item

    Keywords

    General equilibrium; utility; profit maximization; spillover effects.;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

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