Approximate aggregation of excess demand functions

• Published in: Journal of economic theory Vol. 45; no. 2; pp. 417 - 424
• Main Author: Vilks, Arnis
• Format: Journal Article
• Language: English
• Published: New York Elsevier Inc 01.08.1988; Elsevier; Academic Press
• Series: Journal of Economic Theory
• Subjects: Demand functions
• ISSN: 0022-0531; 1095-7235
• DOI: 10.1016/0022-0531(88)90279-7

As consistent aggregation is hardly ever possible, some kind of “approximate” aggregation seems to be required. In this paper an approximate aggregation procedure is defined within the framework of Walrasian market excess demand functions, and it is shown that with this concept certain basic properties will be inherited by the approximate macromodel. Indeed, gross substitutability is implied for the macromodel by a much weaker property of the underlying microsystem. Thus, the disadvantage of having only an approximate macromodel is partly compensated by the fact that certain “anomalies” of the micromodel are “smoothed away.”