Smallness of a commodity and partial equilibrium analysis

• 成果类型: Article
• 署名作者: Hayashi, Takashi
• 署名单位: University of Glasgow
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2012.12.017
• 发表日期: 2013
• 页码: 279-305
• 关键词: Partial equilibrium analysis; No income effect; consumer surplus; general equilibrium

摘要

Partial equilibrium analysis has a conceptual dilemma that its object should be negligibly small in order to be free from income effect but then the consumer does not care for it and the notion of willingness to pay for it does not make sense. In the setting of a continuum of commodities, we propose a limiting procedure which transforms the general many-commodity framework into a partial single-commodity framework. In the limit, willingness to pay for a commodity is established as a density notion and it is shown to be free from income effect. This pins down an exact relationship between general equilibrium analysis and partial equilibrium analysis. (C) 2012 Elsevier Inc. All rights reserved.