On the Uniqueness and Stability of the Equilibrium Price in Quasi-Linear Economies

TL;DR

This paper proves the uniqueness and local stability of equilibrium prices in quasi-linear economies, extending partial equilibrium results to higher dimensions and analyzing surplus implications.

Contribution

It establishes the conditions for unique and stable equilibrium prices in quasi-linear economies with multi-dimensional consumption.

Findings

Normalized equilibrium price is unique in quasi-linear economies.

Equilibrium price is locally stable under the tâtonnement process.

Extends partial equilibrium results to higher-dimensional consumption spaces.

Abstract

In this paper, we show that if every consumer in an economy has a quasi-linear utility function, then the normalized equilibrium price is unique, and is locally stable with respect to the t\^atonnement process. Our study can be seen as that extends the results in partial equilibrium theory to economies with more than two dimensional consumption space. Moreover, we discuss the surplus analysis in such economies.