Consider a two-good exchange economy withr identical consumers. The consumption set is R, the individual endowments are e R? ,, and the preferences are continuous and strongly monotone but not necessarily convex. Argue that the symmetric allocation in which + + every consumer gets her initial allocation is either a Walrasian equilibrium (for some price vector p) or, if it is not, then for r large enough it is not a Pareto optimum. [Hint: the differentiable case is simpler.]

Consider a two-good exchange economy withr identical consumers. The consumption set is R, the individual endowments are e R? ,, and the preferences are continuous and strongly monotone but not necessarily convex. Argue that the symmetric allocation in which + + every consumer gets her initial allocation is either a Walrasian equilibrium (for some price vector p) or, if it is not, then for r large enough it is not a Pareto optimum. [Hint: the differentiable case is simpler.]

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter13: General Equilibrium And Welfare

Section: Chapter Questions

Problem 13.1P

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