General Equilibrium with Producers and Brokers Existence and Regularity
Universite de Paris 9 Dauphine - CEREMADE
Salomon Smith Barney, Inc.
Economics Letters, Vol. 41, pp. 257-263, 1993
In this paper we prove the existence of general equilibrium with transaction costs generalizing Hahn's (Review of Economic Studies, 1973, 40, 449-461) model by introducing producers and nonconvexities (in particular we allow for increasing returns in transaction sets). We also recover any exchange economy as a special case and this allows us to analyze the effects of small frictions on bid-ask prices, consumption vectors and utilities. We prove that, generically, the induced perturbations are of the same order as the frictions.
Keywords: General equilibrium
JEL Classification: D50Accepted Paper Series
Date posted: August 15, 2007
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