ON BENASSY'S DISEQUILIBRIUM THEORY

Abstract

Suppose that we are in an exchange economy where prices of all commodities are fixed arbitrarily. If such prices are fortunately equal to the Walrasian equilibrium ones, then each consumer can realize his demands and supplies which are most preferable in his budget set. But if not, that happy situation can not be observed. That is, under such fixed-prices, the market clearance can not be compatible with the utility-maximization of consumers. In his brilliant paper [1], Benassy introduces the rationing at markets and the expectation on quantity constraints by each consumer, and shows that there is a state of economy, K-equilibrium, where consumers can trade with each other under given prices. Benassy's paper has become a part of the basic literature in the general disequilibrium theory which is currently growing. It is our purpose in this note to clarify one point which remains still ambiguous in Benassy's theory of disequilibrium.