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Chiappori, Pierre-André; Ekeland, Ivar

Disaggregation of excess demand functions in incomplete markets. (English) Zbl 0958.91016

J. Math. Econ. 31, No. 1, 111-129 (1999).
The paper studies general equilibrium incomplete markets, where the number of consumer is \(N\), the number of goods is \(L\), and dimension of the space of admissible trades is \(K\). If \(K=L-1\), the market is complete. The market is incomplete if certain trades are not possible. Such situations arise naturally in the framework of risk-trading. The authors prove that, if \(N\geq K\), any non-vanishing analytic function satisfying the natural extension of the Walras law is, locally at least, the excess demand function of such a market. The technique of differential geometry due to R. Bryant, S. Chern, R. Garner, H. Goldschmidt and P. Griffiths [Exterior Differential Systems, Publ. MSRI 18 (1991; Zbl 0726.58002)] is extensively used in the proofs.
Reviewer: George Osipenko (St.Peterburg)

Cited in 1 Review
Cited in 9 Documents

MSC:

91B26 Auctions, bargaining, bidding and selling, and other market models
91B42 Consumer behavior, demand theory
91B50 General equilibrium theory

Keywords:

incomplete market; demand function; optimization problem; Cartan character; disaggregation problem; pressure flow

Citations:

Zbl 0726.58002
Cite Review PDF
Full Text: DOI

References:

[1] Bottazi, J.M., Hens, T., On excess demand functions with incomplete markets, to appear, Journal of Economic Theory.; Bottazi, J.M., Hens, T., On excess demand functions with incomplete markets, to appear, Journal of Economic Theory.
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