Characterising competitive equilibrium in terms of opportunity

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Abstract

This paper analyses alternative profiles of opportunity sets for individuals in an exchange economy, without assuming that individuals’ choices reveal coherent preferences. It introduces the concept of a ‘market-clearing single-price regime’, representing a profile of opportunity sets consistent with competitive equilibrium. It also proposes an opportunity-based normative criterion, the Strong Opportunity Criterion, which is analogous with the core in preference-based analysis. It shows that every market-clearing single-price regime satisfies the Strong Opportunity Criterion and that, in the limit as an economy is replicated, only such regimes have this property.
Original languageEnglish
Pages (from-to)487–503
Number of pages17
JournalSocial Choice and Welfare
Volume48
Issue number3
Early online date9 Jan 2017
DOIs
Publication statusPublished - Mar 2017

Keywords

  • opportunity criterion
  • competitive equilibrium
  • behavioural welfare economics

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