Le, Van Cuong, Page, Frank H. and Wooders, Myrna Holtz (2001) Arbitrage and equilibrium in economies with externalities. Working Paper. Coventry: University of Warwick, Department of Economics. (Warwick economic research papers.

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Abstract

We introduce consumption externalities into a general equilibrium model with arbitrary consumption sets. To treat the problem of existence of equilibrium, a condition of no unbounded arbitrage, extending the condition of Page (1987) and Page and Wooders (1993, 1996) is defined. It is proven that this condition is sufficient for the existence of an equilibrium and both necessary and sufficient for compactness of the set of rational allocations.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	H Social Sciences > HB Economic Theory Q Science > QA Mathematics
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Arbitrage, Equilibrium (Economics), Externalities (Economics), Recessions
Series Name:	Warwick economic research papers
Publisher:	University of Warwick, Department of Economics
Place of Publication:	Coventry
Date:	April 2001
Number:	No.588
Number of Pages:	17
Status:	Not Peer Reviewed
Access rights to Published version:	Open Access
Description:	Original version, June 2000; current version, April, 2001
Funder:	Social Sciences and Humanities Research Council of Canada (SSHRC), Universitats of Catalonia (UCat)
Adapted As:	Le, V.C., Page, F.H. and Wooders, M.H. (2001). Arbitrage and equilibrium in economies with externalities. Journal of Global Optimization, 20(3-4), pp. 309-321.
References:	[1] Allouch, N. (1999) “Equilibrium and No Market Arbitrage,” Working Paper, CERMSEM, Universite de Paris I. [2] Borglin, A. and Keiding, H. (1976) “Existence of Equilibrium Actions and of Equilibrium: a Note on the ‘New’ Existence Theorems,” Journal of Mathematical Economics 3, 313-316. [3] Dana, R.-A., Le Van, C. and Magnien, F. (1999) “On Different Notions of Arbitrage and Existence of Equilibrium,” Journal of Economic Theory 87, 169-193. [4] Florenzano, M. (1981) “L’Equilibre Economique General Transitif et Intransitif: Problemes d’Existence,” Monographies du Seminaire d’Econometrie, Editions du CNRS, Paris. [5] Hammond, P.J. (1983) “Overlapping Expectations and Hart’s Condition for Equilibrium in a Securities Model,” Journal of Economic Theory 31, 170-175. [6] Hart, O.D. (1974) “On the Existence of Equilibrium in a Securities Model,” Journal of Economic Theory 9, 293-311. [7] Nielsen, L. (1989) “Asset Market Equilibrium with Short Selling,” Review of Economic Studies 56, 467-474. [8] Page, F.H. Jr. (1987) “On Equilibrium in Hart’s Securities Exchange Model,” Journal of Economic Theory 41, 392-404. [9] Page, F.H. Jr. and Wooders, M.H. (1993) “Arbitrage in Markets with Unbounded Short Sales: Necessary and Sufficient Conditions for Nonemptiness of the Core and Existence of Equilibrium”, University of Toronto Working Paper No. 9409. [10] Page, F.H. Jr. andWooders, M.H. (1996) “A Necessary and Sufficient Condition for Compactness of Individually Rational and Feasible Outcomes and Existence of an Equilibrium,” Economics Letters 52, 153-162. [11] Page, F.H. Jr., Wooders, M.H., and Monteiro, P.K. (2000) “Inconsequential Arbitrage,” Journal of Mathematical Economics 34, 439-469. [12] Rockafellar, R.T. (1970) Convex Analysis, Princeton University Press. [13] Shafer, W.J. and Sonnenschein, H. (1975) “Equilibrium in Abstract Economies without Ordered Preferences”, Journal of Mathematical Economics 2, 345-348. [14] Tian, G. and Zhou, F. (1992) “The Maximum Theorem and the Existence of Nash Equilibrium of (Generalized) Games without Lower Semicontinuities,” Journal of Mathematical Analysis and Applications 166, 351-364. [15] Werner, J. (1987) “Arbitrage and Existence of Competitive Equilibrium,” Econometrica 55, 1403-1418.
URI:	http://wrap.warwick.ac.uk/id/eprint/1590

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