Conclusion

Abstract

We have developed an approach to the modeling of an economy with price-making firms whose information is limited, have defined an equilibrium in which markets are cleared and firms’ choices are rational given the limits to their information, and have studied existence of such an equilibrium when the economy displays increasing returns. These steps have been little more than a beginning. Clearly market-cleared states could be stabilized by a great many convolutions other than the “matching” convolution which we have principally studied, accompanied by a great many visualizations other than the simple ones which say “each of my competitors is like me” or “each has a technology which is a separable and more efficient version of mine.” Convolutions which capture some elements of observed behavior of oligopolists, and visualizations which realistically state competitors’ knowledge of each other’s technology, would be well worth investigating.