A Model Distinguishing Production and Consumption Bundles

Abstract

In contrast with the classical theory of Arrow and Debreu, a model of a private ownership economy is presented in which production and consumption bundles are treated separately.Each of the two types of bundles is assumed to establish a convex cone.This also offers a point of contrast in comparison with the classical theory.The main part in the modelling is the introduction of production technologies which can be thought of as replacing the notion of production sets in Arrow and Debreu s model.It is shown that under mild economically interpretable conditions, a Walrasian equilibrium exists.