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existence of equilibrium


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The demonstration that an equilibrium exists for an economic model or a game. An existence proof requires the demonstration that there is a simultaneous solution to the set of equations that describe the equilibrium. For example, the equations describing equilibrium of the Arrow–Debreu economy are obtained from the conditions for market clearing. Not all economic models possess an equilibrium: a competitive insurance market with adverse selection may have neither a pooling nor a separating equilibrium.

Subjects: Economics.


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