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Simple Economies with Multiple Equilibria

  • Author(s): Bergstrom, Ted C
  • Shimomura, Ken-Ichi
  • Yamato, Takehiko
  • et al.
Abstract

This paper studies a general class of pure exchange economies that have multiple equilibria, which extend an example presented by Lloyd Shapley and Martin Shubik. For such economies, we find easily verified conditions that determine whether there are multiple equilibria. We also provide simple methods for constructing economies in which arbitrary pre-specified sets of prices are equilibria. These economies have simple comparative statics, since prices at interior competitive equilibrium depend on the parameters of utility but not on the endowment quantities.

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