scientific article; zbMATH DE number 1272999

Publication date 5 April 1999

advanced undergraduates bargaining consumers core of a market economy economic model of firms exercises extensive bibliography future markets general economic equilibrium graduate students of economics Kakutani fixed-point theorem mathematical models in economics textbook

Mathematics Subject Classification ID

Introductory exposition (textbooks, tutorial papers, etc.) pertaining to game theory, economics, and finance (91-01) Special types of economic equilibria (91B52)

Review text

The textbook of the theory of general economic equilibrium. The focus of this book is to overcome the barrier of mathematical abstraction with the aim to make the theory more accessible to a wider audience of advanced undergraduates and graduate students of economics. For this purpose, the textbook is divided into 8 parts (Parts A--H) and the explanation proceeds from the simplest models in Part A up to a sophisticated treatment including point to set mappings in Part G (Part H has a summarizing character). Part A contains as a motivation the Robinson Crusoe and Edgeworth box models of general equilibrium, and some Pareto efficiency investigations. The next chapter of this part contains a summary of mathematics used throughout the rest of the book. Beside some basic results from analysis and algebra, convexity, separation theorems and Brouwer fixed point theorem in finite-dimensional Euclidean spaces are included. Part B presents the theory of firm and consumer behavior, develops the Walras law and proves the existence of the general equilibrium under the assumption that the firm technology and the consumer's set of feasible commodity vectors are bounded. The bounds are not exogenously imposed by the modeler, but are supposed to represent the underlying technology. Part C generalizes the results of Part B to the case of unbounded technology. Part D presents the classic fundamental theorems of welfare economics, which describe the relationship of general equilibrium to efficient allocation. Problems of bargaining and equilibrium are treated in Part E. The theory of the core of a market economy is presented, convergence of the core of a large economy is investigated and its interpretations are given. In Part F, future markets are introduced and investigated over time under conditions of uncertainty. Throughout the Parts A--F, appropriate assumptions about strict convexity ensured the existence of point-valued demands and supplies. This made possible to avoid problems connected with set-valued functions. Part G overcomes this restriction and generalizes some of the previous results to the case of set-valued demands and supplies. For this purpose, the necessary mathematical background for treating point to set mappings and Kakutani fixed-point theorem are presented. After having explained this mathematical background, the author presents the economic model of firms, consumers, the market economy and the theory of general equilibrium with convex set-valued demand and supply under appropriate continuity assumptions. The concluding Part H contains an overview of the material and a summary with some exercises. At the end of the textbook, the reader will find an extensive bibliography and the index.

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