SFB 303 Discussion Paper No. A - 350
Author: Folkertsma, Carsten
Title: On the Structure of Economies with Production
Abstract: The structure of exchange economies is well understood:
homogeneity, continuity and Walras' Identity characterize their
excess demand functions. Far less is known about the structure of
production economies. In this paper it is shown that the excess demand
function of a production economy is characterized by the same three
properties, if the technology exhibits decreasing returns to scale.
The results concerning the case of constant returns to scale are less
satisfactory. The question by which properties the excess demand
correspondence of an economy with constant returns to scale can be
described, is still open. As a first step we consider a class of these
economies which can be "reduced" to exchange economies preserving the
information about equilibria. For technologies without substitution
we show that the excess demand of these reduced economies has no
additional properties. The proofs of the results confirm once more
the conjecture that the lack of structure in general equilibrium models
is mainly due to the way the consumption side is modelled.
Keywords:
JEL-Classification-Number:
Creation-Date: November, 1991
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