Edgeworth rejective core and dividends equilibria of satiated exchange economies (Q1940383)

The authors prove the non-emptiness of the Edgeworth rejective core for an exchange economy under assumptions which did not bring about the existence of equilibrium with dividends as yet: a particularity of the author's framework is that consumers' utility functions are \textit{not} assumed to be upper semicontinuous. The authors also show that their economy has an equilibrium with dividends, and under an additional weak non-satiation condition they obtain the existence of a Walrasian quasi-equilibrium. The authors consider an exchange economy \(\mathcal{E} = (X_{i}, u_{i}, e_{i})_{i \in I}\), where \(I\) indexes a finite set of consumers and for each \(i \in I\), \(X_{i} \subset \mathbb{R}^{l}\) is the consumption set, \(e_{i} \in \mathbb{R}^{l}\) is the initial endowment, and \(u_{i} : X_{i} \rightarrow \mathbb{R}\) is the utility function of the \(i\)th consumer normalized as \(u_{i}(e_{i}) = 0\). The set of attainable allocations is denoted by \[ \mathcal{A}(\mathcal{E}) = \left\{(x_{i})_{i \in I} \in \prod_{i\in I}X_{i} : \sum_{i \in I} x_{i} = \sum_{i \in I} e_{i}\right\}. \] Moreover, set \[ \mathcal{A}_{IR}(\mathcal{E}) = \{(x_{i})_{i \in I} \in \mathcal{A}(\mathcal{E}) : u_{i}(x_{i})\geq 0, i\in I\} \] and \[ \mathcal{U} = \{(v_{i})_{i\in I} \in \mathbb{R}^{l} : \exists x \in \mathcal{A}(\mathcal{E}), 0 \leq v_{i} \leq u_{i}(x_{i}), i \in I\}. \] The projection of \(\mathcal{A}_{IR}(\mathcal{E})\) on \(X_{i}\) is denoted by \(\mathcal{A}_{i}\), and \(S_{i} = \arg\max\{u_{i}(x_{i}) : x_{i} \in X_{i}\}\) is the set of satiation points of \(u_{i}\) in \(X_{i}\). A vector \(p\in\mathbb{R}^{l}\setminus \{0\}\) and \((x_{i})_{i \in I}\in \mathcal{A}(\mathcal{E})\) form a Walrasian quasi-equilibrium of \(\mathcal{E}\) if for each \(i \in I\), \(p \cdot x_{i} = p \cdot e_{i}\) and \(u_{i}(x_{i}') > u_{i}(x_{i}) \implies p \cdot x_{i}' \geq p \cdot e_{i}\). If \(u_{i}(x_{i}') > u_{i}(x_{i})\) implies \(p \cdot x_{i}' > p \cdot e_{i}\) then \((p,(x_{i})_{i \in I})\) is called an equilibrium. A pair \((p,(x_{i})_{i \in I}) \in \mathbb{R}^{l} \times \mathcal{A}(\mathcal{E})\) is a quasi-equilibrium with dividends if for every \(i \in I\) there exists \(m_{i} \in \mathbb{R}\), \(m_{i} \geq 0\), such that \(p \cdot x_{i} \geq p \cdot e_{i} + m_{i}\) and \(u_{i}(x_{i}') > u_{i}(x_{i}) \implies p \cdot x_{i}' \geq p \cdot e_{i} + m_{i}\); \((p,(x_{i})_{i \in I})\) is an equilibrium with dividends if \(u_{i}(x_{i}') > u_{i}(x_{i})\) implies \(p \cdot x_{i}' > p \cdot e_{i} + m_{i}\). Note that \(p=0\) is allowed. A vector \(t\in [0,1]^{I}\) rejects \((x_{i})_{i \in I}\in \mathcal{A}(\mathcal{E})\) if there exists \(t^{1}, t^{2}\in [0,1]^{I}\) and \(y_{i}\in X_{i}\), \(i \in I\), such that \(t = t^{1} + t^{2}\), \(\sum_{i \in I}t_{i}y_{i} = \sum_{i\in I}t^{1}_{i}e_{i} + \sum_{i\in I}t^{2}_{i}x_{i}\), and \(u_{i}(y_{i}) > u_{i}(x_{i})\) for every \(i\in I\) with \(t_{i} > 0\). An \((x_{i})_{i \in I}\in \mathcal{A}(\mathcal{E})\) is in the Edgeworth rejective core if it cannot be rejected by a \(t\in [0,1]^{I}\) with rational \(t^{1},t^{2}\). The authors show that the Edgeworth rejective core of the economy \(\mathcal{E}\) is non-empty and has an equilibrium with dividends provided the following assumptions hold: {\parindent= 0.9 cm \begin{itemize} \item[(A1)] for each \(i \in I\), \(X_{i}\) is convex and contains \(e_{i}\); \item[(A2)] for each \(i \in I\), \(u_{i}\) is strictly quasiconcave; \item[(A3)] for each \(i \in I\), \(\{y_{i} \in X_{i}: u_{i}(y_{i}) > u_{i}(x_{i})\}\) is open in \(X_{i}\) at every \(x_{i}\in \mathcal{A}_{i}\); \item[(A4)] for each \(i \in I\), \(e_{i}\) is in the interior of \(X_{i}\); \item[(A5)] \(\mathcal{U}\) is strongly compact in the sense of \textit{V. F.\ Martins-da-Rocha} and \textit{P. Klinger Monteiro} [J.\ Math.\ Econ.\ 45, No.\ 7--8, 465--478 (2009; Zbl 1173.91024)]. \end{itemize}} The authors also obtain that the economy \(\mathcal{E}\) has an equilibrium if the following additional assumption holds: {\parindent= 0.9 cm \begin{itemize}\item[(A6)] for each \(i \in I\), if \(S_{i} \cap \mathcal{A}_{i} \neq \emptyset\) then \(\inf \{\lambda > 0 : e_{i} + \lambda(x_{i} - e_{i}) \in S_{i}\} < 1\) for all \(x_{i} \in S_{i}\). \end{itemize}} If only (A1)--(A3) and (A5)--(A6) are assumed, the existence of a Walrasian quasi-equilibrium is shown. We note that under different regularity assumptions on the utility functions of consumers, the results obtained by the authors are available in the literature.