Journal Of The Econometric Society

An International Society for the Advancement of Economic
Theory in its Relation to Statistics and Mathematics

Edited by: Guido W. Imbens • Print ISSN: 0012-9682 • Online ISSN: 1468-0262

Econometrica: Apr, 1977, Volume 45, Issue 3

Non-Walrasian Equilibria<573:NE>2.0.CO;2-3
p. 573-590

Hal R. Varian

This paper presents a general equilibrium model which exhibits non-Walrasian equilibria. In Walrasian models economic agents act only on the basis of relative prices. In this model agents take quantity signals into account as well: firms maximize profits subject to a constraint on expected sales, and consumers maximize utility subject to a constraint on realized income. With such a specification it is shown that a non-Walrasian equilibrium will generally exist. Furthermore, the non-Walrasian equilibrium will be a stable equilibrium of an appropriate dynamical system while the Walrasian equilibrium will be unstable.

Log In To View Full Content