A Variational Inequality Scheme for Determining an Economic Equilibrium of Classical or Extended Type
The existence of an equilibrium in an extended Walrasian economic model of exchange is confirmed constructively by an iterative scheme. In this scheme, truncated variational inequality problems are solved in which the agents’ budget constraints are relaxed by a penalty representation. Epi-convergence arguments are employed to show that, in the limit, a virtual equilibrium is obtained, if not actually a classical equilibrium. A number of technical hurdles are, in this way, surmounted.
Key wordsvariational inequalities Walras exchange equilibrium virtual equilibrium epi-convergence penalization equilibrium computations
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