A New Approach for General Equilibrium with Discontinuous Excess Demand Function

Zhiping Xie

The Center for Economic Research of ShandongUniversity

Abstract：Traditional ways to prove the existence of general equilibrium have to entail a common condition that the excess demand function must be continuous. This paper presents a new approach to change it. The technique used in this paper is that we tackle general equilibrium problem, which in fact is a static nonlinear programming problem, with dynamic programming. By this technique, it is strictly proven that general equilibrium with discontinuous excess demand function still exists.

Keywords: existence of general equilibrium, nonconvexity, discontinuous excess demand function, dynamic programming