A Topological Invariant for Competitive Markets

25 Pages Posted: 9 Apr 2009

Date Written: 1997

Abstract

This paper summarizes the concepts of global cones and limited arbitrage introduced in Chichilnisky (Economic Theory, 1995, 5, 79-108), and the corresponding results establishing that limited arbitrage is necessary and sufficient for the existence of a competitive equilibrium and for the compactness of Pareto frontier (announced in Chichilnisky (American Economic Review, 1992, 84, 427-434, and Chichilnisky (Bulletin of the American Mathematical Society, 1993, 29, l89-207). Using the same global cones I extend my earlier results to encompass 'mixed economies' based on Chichilnisky (CORE Discussion Paper No. 9527, 1995). I introduce a topological invariant for competitive markets which deepens the Eoncept of limited arbitrage. This invariant encodes exact information on the equilibria and on the social diversity of the economy and all its subeconomies, and predicts a failure of effective demand.

Suggested Citation

Chichilnisky, Graciela, A Topological Invariant for Competitive Markets (1997). Journal of Mathematical Economics, Vol. 28, 1995, Available at SSRN: https://ssrn.com/abstract=1375228

Graciela Chichilnisky (Contact Author)

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