Essays on non-Walrasian economics
This thesis consists of five essays on non-Walrasian economics. There are two essays on rational conjectural equilibrium, RCE, two on repeated games and one on general equilibrium with price-making firms and increasing returns to scale. The first two essays consider rational conjectural equilibrium from a game theoretic perspective. It is shown that (i) in general there is a continuum of RCE. (ii) Some interesting price behaviour, such as kinked demand behaviour and mark-up pricing can be supported as a RCE in a partial equilibrium model. (iii) Conjectural models can be regarded as a static representation of either a repeated game story with adjustment cost, or an instantaneous response repeated game, and that the rationality condition (in the 'correctness' sense) on conjectures amounts to sub-game perfectness in the super-game. In the third essay the solutions to repeated games with bounded memory are considered. It is shown that the Folk Theorem of repeated games (multiplicity of equilibria) can be extended to repeated games with one-period memory either if the action space of each player at each stage of the repeated game contains 'many elements' or if there is uncertainty. In the fourth essay the solutions to anonymous repeated game with a large but finite number of players are considered. In the fifth essay a General Equilibrium model with oligopolistic firms is developed (the model is based on my results in earlier chapters). Each oligopolistic firm is assumed to perceive (correctly) a kinked demand curve. I shall prove the existence of an equilibrium for such an economy without excluding increasing returns to scale or assuming concave revenue functions for the oligopolists.