A Commodity Space
A Commodity Space
This chapter describes a concept of value that will be used to formulate a model in which the decisions of agents are reconciled in a competitive equilibrium. It describes a commodity space in which quantities and prices both will reside. The stochastic Lagrange multipliers of Chapter 4 are closely related to equilibrium prices and live in the same mathematical space. The planning problem studied in Chapter 4 produces an outcome in which the process for consumption {ct} is an n-dimensional stochastic process that belongs to L20. The chapter presents a heuristic justification for the representation of the value of {ct}. It proceeds by reviewing several examples of commodity spaces and valuation functions.
Keywords: valuation, competitive equilibrium, commodity space, stochastic Lagrange multipliers, consumption
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