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TitleRealizable Utility Maximization as a Mechanism for the Stability of Competitive General Equilibrium in a Scarf Economy
Creator陳樹衡
Chen, Shu-Heng;Yu, Tongkui
Contributor經濟系
Key WordsScarf economy; Walrasian equilibrium; Stability; Realizable utility; Tâtonnement process
Date2021-06
Date Issued29-Apr-2024 14:18:24 (UTC+8)
SummaryA competitive general equilibrium (CGE) is a Pareto-optimal allocation, but it is not always stable under the mechanism of the tâtonnement process. How to drive an economy to the CGE and maintain its stability remains to be an issue with a high intellectual interest. In this article, using the celebrated counterexample of the Scarf economy, we first provide an intuitive and explicit explanation to analyze why the CGE is unstable under the tâtonnement process. Then a novel mechanism, called the realizable utility maximization mechanism (RUMM), is proposed in which the price of a product is adjusted not according to the excess demand as in the standard tâtonnement process, but according to the potential utility of the individuals owning the product. It is found that the RUMM can maintain the stability of the CGE even in the Scarf economy, and can shed light on the role of social learning in stabilizing the Scarf economy as we have learned from the literature of agent-based non-tâtonnement models.
RelationComputational Economics, Vol.58, pp.133-167
Typearticle
DOI https://doi.org/10.1007/s10614-020-09989-x
dc.contributor 經濟系
dc.creator (作者) 陳樹衡
dc.creator (作者) Chen, Shu-Heng;Yu, Tongkui
dc.date (日期) 2021-06
dc.date.accessioned 29-Apr-2024 14:18:24 (UTC+8)-
dc.date.available 29-Apr-2024 14:18:24 (UTC+8)-
dc.date.issued (上傳時間) 29-Apr-2024 14:18:24 (UTC+8)-
dc.identifier.uri (URI) https://nccur.lib.nccu.edu.tw/handle/140.119/150982-
dc.description.abstract (摘要) A competitive general equilibrium (CGE) is a Pareto-optimal allocation, but it is not always stable under the mechanism of the tâtonnement process. How to drive an economy to the CGE and maintain its stability remains to be an issue with a high intellectual interest. In this article, using the celebrated counterexample of the Scarf economy, we first provide an intuitive and explicit explanation to analyze why the CGE is unstable under the tâtonnement process. Then a novel mechanism, called the realizable utility maximization mechanism (RUMM), is proposed in which the price of a product is adjusted not according to the excess demand as in the standard tâtonnement process, but according to the potential utility of the individuals owning the product. It is found that the RUMM can maintain the stability of the CGE even in the Scarf economy, and can shed light on the role of social learning in stabilizing the Scarf economy as we have learned from the literature of agent-based non-tâtonnement models.
dc.format.extent 106 bytes-
dc.format.mimetype text/html-
dc.relation (關聯) Computational Economics, Vol.58, pp.133-167
dc.subject (關鍵詞) Scarf economy; Walrasian equilibrium; Stability; Realizable utility; Tâtonnement process
dc.title (題名) Realizable Utility Maximization as a Mechanism for the Stability of Competitive General Equilibrium in a Scarf Economy
dc.type (資料類型) article
dc.identifier.doi (DOI) 10.1007/s10614-020-09989-x
dc.doi.uri (DOI) https://doi.org/10.1007/s10614-020-09989-x