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TYPICAL PROPERTIES OF LARGE RANDOM ECONOMIES WITH LINEAR ACTIVITIES

Published online by Cambridge University Press:  09 May 2007

ANDREA DE MARTINO ,
MATTEO MARSILI  and
ISAAC PEREZ CASTILLO
ANDREA DE MARTINO
Affiliation:
CNR/INFM-SMC and Dipartimento di Fisica Università di Roma “La Sapienza”
MATTEO MARSILI
Affiliation:
Abdus Salam International Centre for Theoretical Physics
ISAAC PEREZ CASTILLO
Affiliation:
Instituut voor Theoretische Fysica, Katholieke Universiteit Leuven
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Abstract

We study the competitive equilibrium of large random economies with linear activities using methods of statistical mechanics. We focus on economies with C commodities, N firms, each running a randomly drawn linear technology, and one consumer. We derive, in the limit N, C ∞ with n=N/C fixed, a complete description of the statistical properties of typical equilibria. We find two regimes, which in the limit of efficient technologies are separated by a phase transition, and argue that endogenous technological change drives the economy close to the critical point.

Keywords

General equilibriumHeterogeneityThermodynamic limitReplica method
Type
ARTICLES
Information
Macroeconomic Dynamics , Volume 11 , Supplement S1: Interacting Agents and Market Behavior , November 2007 , pp. 34 - 61
Copyright
© 2007 Cambridge University Press

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