约克大学summer math 微观经济T5 Compeititve equilibrium.pdf

Competitive equilibrium Exchange 鈥 There are two consumers, consumer A and consumer B. 鈥 There are two goods: good 1 (x ) and good 2 (x ). 1 2 鈥 Consumers possess initial endowments (stocks) of goods: good 1 and good 2 鈥 饊寯戆 is total endowment of consumer A, and 饊寯戆 is total endowment of consumer B. 鈥 Their endowments of goods 1 and 2 are respectively: 饊寯戆 = 饊寯戆 , 饊寯戆 and 饊寯戆 = 饊寯戆? 饊寯戆 1 2 1 2 鈥 饊寯戆 denotes endowment of consumer A of good 1, 饊寯戆 denotes 1 2 endowment of consumer A of good 2, etc鈥 鈥 We assume that the initial endowments are: 饊寯戆 = 8,2 and 饊寯戆 = 2,6 鈥 The total quantities of goods are: 鈥 Good1 : 饊寯戆 +饊寯戆 = 8 + 2 = 10 1 1 鈥 Good2 : 饊寯戆 +饊寯戆 = 2 + 6 = 8 2 2 The Edgeworth Box 0B A B 飦 飥伔 飥? 2 2 0A A B 飦 飥伔 飥?0 1 1 Feasible allocation 鈥 An allocation is a feasible allocation if the total amount of each good consumed is equal to the total amount available: 戆 戆 戆 戆 饊寯1 +饊寯1 = 饊仴1 +饊仴1 戆 戆 戆 戆 饊寯2 +饊寯2 = 饊仴2 +饊仴2 鈥 The Edgeworth box provides therefore a complete picture of every feasible distribution of existing two commodities