Global stability in a class of markets with three commodities and three consumers (Q1084000)

In 1961 H. Scarf gave a famous counterexample to the conjecture that the tâtonnement process of price adjustment in general equilibrium theory is globally stable. This paper looks at the question of stability vs. instability by perturbing the initial endowments of consumers. In an earlier work the author showed that for Scarf's example the measure of the set of initial endowments that result in global stability of the tâtonnement is quite large, in fact approximately equal to 0.806 when the measure of all endowments considered is normalized at unity [see Int. Econ. Rev. 22, 461-467 (1981; Zbl 0469.90009)]. This paper gives a generalization of the earlier result to a class of economies that includes Scarf's example as a limiting case. It is shown that for this class of economies the measure of the set of endowments resulting in global stability is larger than the number for Scarf's example. The class of economies permits substitutability in consumption which was not the case in Scarf's example.