Free-market prices tend to equilibria
Date
2010-05-27T18:04:34Z
Authors
Diacu, Florin
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Abstract
Ignoring the way the exchange of goods takes place and taking into account only the result of the trade, we analyze the relation between demand, supply, and prices. We prove that in a free-market economy ruled only by demand and supply there are infinitely many equilibria, all stable, and that prices tend either to one of the equilibria or to zero. Moreover, we show that if other forces act on the market then, generically, no equilibria exist.