A dynamical, pure exchange economy with feedback pricing

Aubin, Jean-Pierre

Aubin, Jean-Pierre (1981), A dynamical, pure exchange economy with feedback pricing, Journal of Economic Behavior and Organisation, 2, 2, p. 95-127. http://dx.doi.org/10.1016/0167-2681(81)90001-9

Type

Article accepté pour publication ou publié

Date

1981

Journal name

Journal of Economic Behavior and Organisation

Volume

Number

Publisher

Elsevier

Pages

95-127

Abstract (EN)

This paper examines a decentralized, dynamical, pure exchange economy in which changes in an individual consumers demand depend on his own consumption and on prices. An ‘instantaneous Walras law’ provides a sufficient condition for the existence of viable exchange trajectories. Such dynamic demand systems might result from goalseeking behavior of the March-Simon type, or when satisfaction of well defined preferences is continually improved through incremental adjustments in consumption. In contrast to Walrasian tâtonnement or Sinale's price adjustment model, prices in the present study follow a feedback control law that responds only to current consumer states. Various generalizations are also presented.

Subjects / Keywords

pure exchange economy

JEL

C70 - General