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Motivation. That elegant fiction the competitive equilibrium seems
still to dominate the frontiers of theoretical microeconomics. We
may think of it in a general way as a state of affairs wherein
economic agents, responding "rationally" to annoWlced prices, make
choices which are consistent and feasible. The prices may also be
described as "taken" for one reason or another the agents who
respond to them consider them as given. The existence of such a
state, its optimality, its robustness against free bargaining among
agents when there are many of them, its Wliqueness, its stability
when price displacements evoke specified adjustments--all these
issues have been studied, and continue to be studied in a variety
of settings. Slowly the equilibrium investigated begins to
incorporate public goods, externalities of certain kinds,
differences in agents' information, and infinitely many time
periods. The appeal of such results need not be belabored: the
equilibrium studied may sustain an optimal resource allocation, and
when it does it sus tains it in a manner that appears to be
informationally efficient and to accord well with individual
incentives. Therefore it is important to extend the circumstances
under which an equilibrium exists, under which it sustains opti
mality, and under which it survives displacements as well as free
bargaining among agents."
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