L061113CompetitiveMktsWEB - S.Grant ECON501 COMPETITIVE...

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S.Grant ECON501 COMPETITIVE MARKETS (Preview for Next Semester) Elements: I consumers i =1 ,...,I J f rms j ,...,J L goods c ,...,L u i : X i R where X i R L + % i X i × X i ,where X i R L , represented by utility fn u i ( · ) ω =( ω 1 ,...,ω L ) 0 , economy-wide endowment Y j R L , production set for f rm j . 1 S.Grant ECON501 If ¡ y 1 ,...,y J ¢ Y 1 × ... × Y J then total (net) amount of good c available to the economy is ω c + P j y j c . DEFN: An economic allocation ¡ x 1 ,...,x I ; y 1 J ¢ is a speci f cation of a consumption vector x i X i for each consumer i and a production vector y j Y j for each f rm j . The allocation is feasible if I X i =1 x i c ω c + X j y j c ,fo r c . Pareto Optimality A feasible allocation ¡ x 1 I ; y 1 J ¢ is Pareto optimal (or Pareto e cient ) if there is no other feasible allocation ¡ ˆ x 1 ,..., ˆ x I y 1 ˆ y J ¢ such that u i ¡ ˆ x i ¢ u i ¡ x i ¢ for all i and u i ¡ ˆ x i ¢ >u i ¡ x i ¢ for some i . 2
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S.Grant ECON501 Competitive Equilibria in Private Ownership Economy To above description of the economy specify: 1. initial allocation of endowments
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This note was uploaded on 09/04/2010 for the course ECON 501 taught by Professor Grant during the Spring '10 term at Rice.

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L061113CompetitiveMktsWEB - S.Grant ECON501 COMPETITIVE...

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