Some Examples of Global Instability of the Competitive Equilibrium

Herbert E. Scarf

483 citations0/0 files storedInternational Economic Review

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Abstract

In this paper we consider the problem of stability of the competitive equilibrium. The market demand functions are sums of individual demand functions obtained directly by utility maximization. The rate of change of the price of each commodity is assumed to be proportional to the excess market demand for that commodity. A number of examples are given for which the motion of the prices is globally unstable in the sense that starting from any set of prices other than equilibrium, the prices oscillate without tending towards equilibrium.

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2011Handbook of Social Choice and Welfare 1976A convergent process of price adjustment and global newton methods 2006An Efficient Dynamic Auction for Heterogeneous Commodities 1962The Stability of a Competitive Economy: A Survey Article 2003Democracy Defended 2002Still dead after all these years: interpreting the failure of general equilibrium theory 1972Two Remarks on the Number of Equilibria of an Economy 1978Effective Price Mechanisms

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