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A Theorem on Non-Tatonnement Stability
Frank H. Hahn
Takashi Negishi
Abstract
This paper investigates an adjustment process for a pure exchange economy out of equilibrium, when trading is allowed at non-equilibrium prices. The "trading rule" postulated is that if a good is in excess demand at the going prices then trading ensures that no one will hold more of that good than he desires and vice versa when there is excess supply. An example of this mechanism is provided. It is shown that the system approaches an equilibrium.
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