Existence of Competitive Equilibria in Markets with a Continuum of Traders

by Robert J. Aumann


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It is well known, and easy to establish, that there exist markets that do not have competitive equilibria, provided the traders do not have convex preferences--that is, that the set of commodity bundles preferred or indifferent to a given bundle is not always convex. It is proved, nevertheless, that in a market consisting of a continuum of traders, each one individually insignificant, there is always a competitive equilibrium, even when the preferences are not convex. (See also RM-3518-PR, RM-3553-PR.)

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