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Unformatted text preview: equilibrium values for prices and allocations (c) Verify that the prices and allocations you solved for satisfy the necessary conditions for equilibrium (d) Which agent enjoys higher utility in the equilibrium, and why? 2. Now revert back to the original description of preferences and endowments. Consider a Pareto e ﬃ cient allocation indexed by the Pareto weight α. Show that for any α ∈ (0 , 1) this e ﬃ cient allocation can be decentralized as a competitive sequential markets equilibrium given an appropriate choice for a 1 (where a 1 is not necessarily equal to zero). 1...
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This note was uploaded on 11/10/2011 for the course ECON 601 at Cornell.
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