On the existence of approximated equilibria in discontinuous economies (Q2387403): Difference between revisions

It is well known that equilibria need not exist in the standard general equilibrium model with incomplete markets (GEI) because of the discontinuity of the market excess demand at certain prices. In this paper it is shown, that if the aggregate excess demand of the considered economy satisfies (besides usual conditions) a special (economically relevant) weak continuity condition, then an existence theorem holds for skillfully defined approximated equilibria (which are generically real equilibria). The point of the (not so simple) proof is an extension of Brouwer's fixed point theorem (and ist variational form), such that it holds also for the considered weaker continuity. In the proof the weak continuity is extended to a continuous version and then topological degree theory is applied.