Skip to main content Accessibility help
×
Hostname: page-component-586b7cd67f-2brh9 Total loading time: 0 Render date: 2024-11-22T11:34:57.420Z Has data issue: false hasContentIssue false

Chapter 5 - On equilibria with rationing

from Part III - Non-Walrasian economics

Published online by Cambridge University Press:  05 January 2013

Get access

Summary

The literature about the so-called equilibria with rationing is one attempt (among many) to tackle questions that arise at levels that can be categorized for analytical convenience.

On one hand, there has been some discomfort with the way in which competitive Walrasian equilibrium is formulated classically. The classical definition does not depict any relations among economic units and, consequently, there is an unknown of the system (the equilibrium price vector) that is not chosen by any agent. Alternatively, one of the first proofs of the existence of a competitive Walrasian Equilibrium (Arrow and Debreu, 1954) reduces an economy with m agents to a game in normal form with m + 1 agents, the last one of which is the auctioneer whose role is to choose the price vector. This provides a centralized version of Walrasian competitive equilibria (WCE). Clearly, the theorem regarding the equivalence of the core and the set of Walrasian equilibria in large economies gives a decentralized version of Walras's notion.

On the other hand, there has been a gap between macroeconomics and microeconomics. Whereas, given the assumption of competition, it was assumed in microeconomic theory that individuals act only on the basis of price, it is supposed in macroeconomic Keynesian theory that agents take into account quantity constraints.

More precisely, it is possible to connect the recent development of the formalized theory of equilibrium with rationing with four anterior trends of analysis.

The first connection is well known and goes back to Keynes. In a nutshell, Clower (1965) and Leijohnufvud (1977) emphasize the necessity of taking into account the way in which transactions are made and the difficulty of getting an equilibrium price vector in a decentralized way.

The second one seems to be largely unknown although it is a natural development of Keynesian thinking. I refer to the works of economists who tried to give foundations to French Planning (see, for instance, Masse, 1965). French Planning - a kind of decentralized planning - is usually defined as a “generalized market study.” It is argued that the price mechanism is often ineffective even when markets exist and that there is no spontaneous way of coordinating agents' plans when there is no market, for instance, in the case of almost all future goods. Note that the method consists first of all in providing a set of compatible trades between sectors that they are, in principle, interested to take into account as a basis for their computations. It is not known whether the trades are not too much aggregated to be useful, even for big firms.

Type
Chapter
Information
Publisher: Cambridge University Press
Print publication year: 1983

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Save book to Kindle

To save this book to your Kindle, first ensure [email protected] is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.

Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

Available formats
×

Save book to Dropbox

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.

Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

Available formats
×