Evolutions in the Traditional Walrasian Exchange Equilibrium Framework

Abstract

We start our analysis in the traditional Walrasian general equilibrium framework of pure exchange. There are two main reasons for us to do so. The first reason is that, as most economists certainly will agree, the Walrasian general equilibrium framework stands at the very heart of economics as a fundamental point of reference. Or, as Balasko (1988, p. viii) puts it: “. . . for them [the pure exchange economies], the hidden and intricate structure of the equilibrium model is most easily brought to light. Besides the intrinsic interest in such an undertaking, the insights gained from understanding the mathematical structure of the simpler pure exchange model can be invaluable when dealing with more general models.” Thus, it will hardly be surprising that also for our present analysis the Walrasian framework will turn out to be most useful from the viewpoint of economic intuition as well as from the viewpoint of technical convenience. Indeed, several times in our study we easily can transfer an analysis which we have carried out for the Walrasian set-up to other basic set-ups.