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| Author: | Funk, P. |
| Title: | Bertrand and Walras equilibria in large economies |
| Journal: | Journal of Economic Theory
1995 : DEC, VOL. 67:2, p. 436-466 |
| Index terms: | ECONOMIC CONDITIONS EQUILIBRIUM THEORY ECONOMICS |
| Language: | eng |
| Abstract: | This article studies the approximate Bertrand equilibria of a large but finite economy with free entry for firms and small efficient scales. It establishes the equivalence of the set of regular Walras equilibria of a constant returns to scale limit economy and the set of limits of regular sequences of approximate Bertrand equilibria. This gives a foundation to the Walrasian hypothesis of perfect competition in explaining why firms behave as if they were price-takers and why they set prices that clear markets. |
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