Abstract
The gross substitute assumption is used to establish the existence and uniqueness of an equilibrium and to prove the equilibrium to be stable for a dynamic adjustment system for prices. The gross substitute assumption also implies results of comparative statics, that is, results on the displacement of equilibrium that follows from shifts in demand or changes in initial stocks. The concept of gross substitutes was introduced by Mosak (General equilibrium theory in international trade. Bloomington: Principia Press, 1944) in the context of a pure trading model. A definition with wider application is the one used by Morishima (Equilibrium, stability and growth. Oxford: Clarendon Press, 1964).
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McKenzie, L.W. (2018). Gross Substitutes. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_1115
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DOI: https://doi.org/10.1057/978-1-349-95189-5_1115
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