Distribution Characteristics of General Equilibrium

Abstract

The previous chapter outlined the modern theory of general equilibrium and indicated the significance of this for an understanding of the distributional relationships that hold in an equilibrium of supply and demand. Here we consider these distributional characteristics in more detail. The primary emphasis is placed on the intertemporal interpretation of the theory as outlined above (pp. 50–2). However, much of what is said will also relate to other interpretations of the theory. And later (pp. 86–9) it is shown that the relationships apply to certain types of equilibria which, strictly speaking, are not Arrow-Debreu equilibria. This will prove of some importance in subsequent chapters as it allows alternative theories of distribution to be shown to be consistent with that of Arrow-Debreu.