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Enrique Kawamura General Equilibrium with Unawareness in Economies with ProductionsGeneral Equilibrium with Unawareness in Economies with Production. ¤

By Enrique Kawamura

Abstract

This paper investigates two types of GEI models with production and unawareness, extending the framerwork of Modica et al (Economic Theory, 1998). Existence of equilibrium in an entrepreneurship economy is guaranteed given their same assumptions coped with decreasing-returns-to-scale technologies. A non-existence example is provided to show the necessity of some minimum awareness by agents. Two results from the standard GEI with production framework still hold: the maximum net present value characterization of equilibrium output and the Modigliani-Miller Theorem. A modi…ed riskevaluation-by-owners formula is also provided. An example of commodity innovation shows that it is not always the case that a nontrivial change in awareness leads to a di¤erent equilibrium outcome. In an ownership economy, the Pareto ownership equilibrium is characterized. As a side result, a modi…ed version of the Minkowski-Farkas lemma is proved. Finally, it is shown that unanimity in production decisions still holds under multiplicative uncertainty. This is a very preliminary version. I acknowledge the obsrevations by the semina

Year: 2013
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