Equilibrium Theory with Possibly Satiated Preferences

Abstract

In the applications of equilibrium theory one occasionally encounters situations where consumption sets are naturally compact. Two examples are:

• (i) fix-price equilibria where consumption is restricted to a given budget set and the equilibrating variables are ration-coupons prices (as in Drèze and Muller, 1980);

• (ii) models where the choice variables are probability distributions on a fixed number of indivisible objects (as in Hylland and Zeckhauser, 1979).

Support from the National Science Foundation is gratefully acknowledged. Thanks are due to the referees and editor for helpful comments.