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WINE
2007
Springer

Continuity Properties of Equilibrium Prices and Allocations in Linear Fisher Markets

14 years 6 months ago
Continuity Properties of Equilibrium Prices and Allocations in Linear Fisher Markets
Abstract. Continuity of the mapping from initial endowments and utilities to equilibria is an essential property for a desirable model of an economy – without continuity, small errors in the observation of parameters of the economy may lead to entirely different predicted equilibria. We show that for the linear case of Fisher’s market model, the (unique) vector of equilibrium prices, p = p(m, U) is a continuous function of the initial amounts of money held by the agents, m, and their utility functions, U. Furthermore, the correspondence X(m, U), giving the set of equilibrium allocations for any specified m and U, is upper hemicontinuous, but not lower hemicontinuous. However, for a fixed U, this correspondence is lower hemicontinuous in m.
Nimrod Megiddo, Vijay V. Vazirani
Added 09 Jun 2010
Updated 09 Jun 2010
Type Conference
Year 2007
Where WINE
Authors Nimrod Megiddo, Vijay V. Vazirani
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