# Questions tagged [walrasian]

The tag has no usage guidance.

51 questions
Filter by
Sorted by
Tagged with
86 views

### How can a "producer face a limited market as regards sales and yet a highly competitive market as regards price"?

Kaldor (1972): it is evident that the co-existence of increasing returns and competition—emphasised by Young and also by Marx, but wholly excluded by the axiomatic framework of Walrasian economics—is ...
1 vote
224 views

### What does it mean "non-Walrasian" or "quasi-Walrasian"?

In a recent NBER workshop, Robert Hall started a discussion with his first slide summarizing the macro literature. I am not very familiar with either DMP model or New Keynesian model and have no idea ...
123 views

1 vote
57 views

### How to find a Walrasian equilibrium for this economy?

Consider a production economy with 2 goods, 1 and 2, two consumers A and B, and 2 firms $\alpha,\beta$. The consumers' utility functions are \begin{align} u_A(x_1^A,x_2^A)=x_1^A+x_2^A-\frac{1}{24}(x_1^...
88 views

### How do I argue that the Walrasian equilibrium is unique?

Consider an economy with 1 consumer and 1 firm. There are only 2 goods, leisure $l$ and corn $c$ and the consumer is endowed with 24 hours of leisure. The consumer's utility function is $u(c,l)=cl$. ...
1 vote
4k views

### Perfect Complements - Walrasian Equilibrium

For a homework , I struggled to solve the following question but couldn't go further: endowment of person 1 = (30,0) endowment of person 2 = (0,20) utility ...
151 views

### How to find a Walrasian equilibrium for this production economy?

Consider a production economy with 2 consumers and 2 firms. There are 3 goods: leisure $l$ and two goods $x,y$. The utility function of both consumers are $u_i(l_i,x_i,y_i)=l_i(x_i)^2(y_i)^2$ and the ...
117 views

1k views

### Robinson Crusoe Economy Question

Question: Hypothetically, Robinson Crusoe is stuck on an island and can choose between working on gathering coconuts or leisure. The utility function is: $U(C,L)=C^{2/5}L^{3/5}$ where C is the num of ...
233 views

### What is the budget constraint when we assume a common utility function?

Let's consider an exchange economy with two identical consumers. The common utility function is: $$u^i (x_1, x_2) = x_1^α x_2^{1-α} \;\;\; \text{for} \;\;\; 0 < α < 1.$$ Society has 10 units of ...
272 views

### Why is there a Walrasian Equilibrium if excess demand goes to infinity as price goes to 0?

In one exercise, we have to argue that a Walrasian Equilibrium exists and the solution says that if we can see that excess demand goes to infinity as price goes to 0, and as price goes to infinity, ...
1 vote
419 views

### When is an allocation in the core of an economy but it's not a Walrasian equilibrium?

So I was given this problem where both agents have Cobb-Douglas utility functions and I'm asked to find an allocation that's in the core but not a Walrasian equilibrium. Isn't the core of an economy ...
107 views

233 views

### Correct and complete characterisation of the Walrasian demand function

I would like to propose to you the following problem and my proposed solution. In particular, I am unsure in how to correctly characterize the Walrasian demand. Can you please have a look at it and ...
329 views

### Walrasian demand with a twist of Leontief function

A consumer has the utility function $u(x_1; x_2) = \min(x_1; x_2) + 5 \max(x_1; x_2)$. Find its Walrasian demand $x^*(p; w)$. I've tried searching it up when we have two Leontief functions summed ...
104 views

### Effect of price on utility

A consumer has an endowment vector $w$; at prices $p$ his demand for the first good exceeds his endowment; $x_1^+(p; pw)>w_1$ then a small increase of $p_1$ will lower his utility. I was discussing ...
1 vote
56 views

### Prove the equation

Let $$x^0=x^*(p^0,w)$$ then $$v(p,px^0)$$ is minimized at $$p=p^0$$ What theorem are we supposed to use in order to solve this, because I am a bit lost. Thanks in advance for all the suggestions/help....
31 views

### Becker Social Pricing and Lack of Smooth Demand

I was reading an article on Becker Social Pricing, where your demand for a good depends on other people's demand for the good. So basically this paper is meant to be a primer into explaining why some ...
1 vote
231 views

### Find equilibrium price using excess demand function

Consider an economy with two agents. There are two goods, x and y. Agents' preferences are Leontif ones as follows: $u_1(x,y)=\min(x,4y)$ and $u_2(x,y)=\min(x,y)$. Initial endowment for 1 is (2,4), ...
1 vote
219 views

### What is the difference between solving for utility maximization separately or aggregately?

I derived the Walrasian equilibrium for an economy of two consumers with their respective utility functions (u1, u2) and initial endowments but later on I am asked to maximize (u1+u2). Does anyone ...
145 views

### General Equilibrium Involving Production

I need a little conceptual clarification. For a standard $N*K*M$ general equilibrium model, would an allocation, say, $y^k$ be Pareto Optimal if it does not solve $max(py^k)$? I understand that the ...
162 views

### Question about the relationship between Weak Axiom and Slutsky Matrix

We know that if a differentiable Walrasian demand function $x(p,w)$ satisfies Walras' law ($p^Tx=w$), homogeneity of degree zero ($x(\alpha p,\alpha w)=x(p,w)$), and the weak axiom of revealed ...
1 vote
320 views

### How to prove that the walrasian demand function $x(p,w)$ is continuous in $p$ and $w$?

If the utility function $u$ is continuous and satisfies local nonsatiation, and walrasian demand function $x(p, w)$ is a function (i.e. always map to only single values), how to prove that $x(p,w)$ is ...
370 views

### Why does strictly Walrasian demand with quasi-concave utility function mean that the walrasian demand having only one single consumption bundle?

In the context of Walrasian demand: Suppose u is continuous, satisfies local nonsatiation, and is strictly quasi-concave, each $w(p, x)$ contains a single consumption bundle. The proof I got from a ...
1 vote
437 views

### What is the Walras law vs first welfare theorem

As far as I know, both of the first welfare theorem and the Walras law are closely tied to the invisible hand. what is the difference between them? thank you very much for your help
1 vote
73 views

### Walras's law in a Fisher market

Walras's law is stated for an exchange market: each agent comes to the market with a certain endowment of each commodity, a price-vector is determined, and the demand of each agent is the best bundle ...
484 views

### Blocking Coalitions

For $n$ individuals, can a blocking coalition only be formed by at least $n/2$ individuals? For example, if there are 6 individuals, can less than 3 individuals form blocking coalitions?
7k views

### What is excess demand/ excess supply?

I've been reading up on Walras' Law and thought I understood it pretty well. However one of my friends asked me point blank what is an example of excess demand or excess supply is and I had some ...
A follow up to my previous question: Given $u(x) = (x_1-b_1)^\alpha (x_2-b_2)^\beta(x_3-b_3)^\gamma$ and ending up with from a maximization that x(p,w) = (b_1, b_2, b_3) + (w - (b \cdot p))\...