Arbitrage and the flattening effect of large numbers
成果类型：
Article
署名作者：
Makowski, L; Ostroy, JM
署名单位：
University of California System; University of California Davis; University of California System; University of California Los Angeles
刊物名称：
JOURNAL OF ECONOMIC THEORY
ISSN/ISSBN：
0022-0531
DOI：
10.1006/jeth.1997.2350
发表日期：
1998
页码：
1-31
关键词：
摘要：
In a model of an exchange economy with a continuum of individuals, we show that competitive equilibrium can be regarded as resulting from the elimination of arbitrage opportunities. Generically, the elimination of such opportunities results in a phenomenon we call the flattening effect of large numbers. The flattening effect provides a precise meaning to the statement that under perfect competition individuals cannot influence prices; they face perfectly elastic demands and supplies. The attractive geometry associated with arbitrage and the flattening effect is highlighted in several figures. We also link the demonstration of equilibrium through arbitrage with the logic of marginalism. (C) 1998 Academic Press.