On the theory of effective demand under stochastic rationing (Q800807)
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English | On the theory of effective demand under stochastic rationing |
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On the theory of effective demand under stochastic rationing (English)
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1984
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This paper proposes a class of stochastic rationing schemes that remedy the shortcomings of the Clower/Benessay and Drèze effective demand functions. The author argues that an effective demand function must possess the following two properties: (1) they must result from an optimization problem; and (2) they may exceed the actual transactions. He argues that the Clower/Benessay function satisfies the second but not the first, while the Drèze function satisfies the first but not the second. The author shows that the removal of the shortcomings of the above two demand functions cannot be achieved by a deterministic rationing scheme. Another reason for assuming a stochastic rationing scheme is that in a large economy it is impossible for an agent to have full information about the actions of all other agents. The stochastic scheme dealt with in the paper is assumed to have the properties of voluntariness of trade, consistency, anonymity, continuity and the short-sided trading rule. Theorem 1 shows that the stochastic rationing scheme which has these properties is linear and thus manipulable. Theorems 2 and 3 prove that under some general conditions, these stochastic manipulable schemes are compatible with the existence of a nontrivial equilibrium in a continuum economy.
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stochastic rationing
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effective demand function
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voluntariness of trade
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anonymity
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short-sided trading rule
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continuum economy
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