# Tag Info

Accepted

### Perfect Competition, Zero profit rule and General Equilibrium

Parallel to Arrow and Debreu, there is the approach of Lionel McKenzie, in which no ownership is specified and all technology has constant returns to scale. In such a model, firms can make no profit. ...
• 12.1k

### Aggregation of the closure property of a production set

Doing this more abstractly, let $Y_j\subseteq\mathbb{R}^n$ be a production set for $j=1,\ldots,J$ and let $$Y=Y_1+Y_2+\cdots+Y_J=\{y_1+y_2+\cdots+y_J|y_j\in Y_j, j=1,\ldots,J\}$$ be the aggregate ...
• 12.1k
Accepted

### Are no arbitrage models and equilibrium models equivalent?

...no-arbitrage models (such as Black-Scholes and HJM) are equivalent to equilibrium models (such as CAPM or C-CAPM). Short Answer Yes, for models where asset prices are assumed to be Ito ...
• 2,619

### Proving local non-satiation in arbitrary metric space

First, you need a vector space in order for convex combinations to be well-defined. However, not every metric on a vector space works. Indeed, under the discrete metric, the result will trivially fail ...
• 12.1k
Accepted

### In GE, is price ever exogenous?

This is an interesting question. There is a tradition of general equilibrium models (even if the phrase 'general equilibrium' needs to be specified) that assumes prices as exogenously given. They are ...
• 3,577
Accepted

• 8,396

### Application of Intermediate Value Theorem for General Equilibrium

I couldn't think of a good hint. If you are having trouble with using the information given, (as the application of Walras + IVT is fairly straightforward), then there are not many tips that can help. ...
• 6,608

### Is the marginal cost the same for every firm in a perfectly competitive market?

No, the marginal cost curves are not necessarily the same for each firm in the market. However the values of marginal costs are. To disprove the general claim that "The marginal cost curve of each ...
• 6,138

### Looking for discussion on equilibrium vs dynamic models in econometrics

Economists (most of them) build their models assuming most of the time stochastic dynamic equilibrium. So Economics does not contrast "dynamic" with "equilibrium" - it synthesizes them. It is ...
• 33.7k
Accepted

### Recent economics theories that involve differential topology?

The main reason differential topology had some success in economics is that supplies powerful methods to show that something holds generically, mainly Sard's theorem and the transversality theorem. ...
• 12.1k
Accepted

### Is the convexity of production sets necessary for the welfare theorems?

Convexity of the production set is indeed not needed for the proof of the first welfare theorem but for the proof of the second welfare theorem. It is not a necessary condition though. It is ...
• 12.1k

### Say's law stated in terms of general equilibrium theory?

How about Walras's law? Walras's law is a principle in general equilibrium theory asserting that budget constraints imply that the values of excess demand (or, conversely, excess market supplies) ...
• 29.3k
Accepted

### Walras's Law V.S Say's Law- Is there a difference?

The way you have defined excess demand, it is only consumer excess demand. But Walras's law holds in any private ownership economy at all prices (at which demand and supply are well defined). Walras's ...
• 12.1k
Accepted

### Walrasian Equilibrium intuition given prices and some initial allocation

The "trick" of this question is that the fact that agents do not want to trade at the given prices does not mean the allocation is Pareto. The only thing you know is that if there is an allocation ...
• 4,188

### First welfare theorem and convexity

Are convex preferences needed for the first welfare theorem? No, convexity of preferences is imposed for other reasons. A general sufficient condition is local non-satiation, which says the agent can ...
• 2,619