Efficiency, Inessentiality and the ‘Debreu Property’ of Prices
The standard story one tells about the classical Debreu-economy, is that all agents trade with a single market dealing in all commodities including contingent and future commodities. An equilibrium for such an economy will determine unique exchange-ratios between commodities and also the amounts traded of each commodity by each household. The important feature of the classical Debreu-economy is that even if one envisages a different institutional arrangement in which there are many markets (distinguished, for example, by the date at which the market operates) nevertheless the set of equilibrium trades (and the exchange rates at which these take place) is unaffected by this alternative description. Thus the equilibria of the Debreu economy are ‘real’ in the standard sense that they depend only on the underlying technology and consumers preferences.
KeywordsTransaction Cost Institutional Arrangement Competitive Equilibrium Monetary Economy Classical Dichotomy
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