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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 nec-essary 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.