ABSTRACT
The neoclassical model of a competitive equilibrium is concisely, rigorously, and clearly presented by Debreu (1959). He shows this model has prices with many appealing features. At these prices households can buy what they most prefer within their means as constrained by their budget. At these same prices firms can choose what to make and sell in order to maximize their profits as constrained by their resources and technology. Each participant can take these prices as given beyond their control on a par with natural forces like gravity. Debreu warns his readers about the limits of this model (see especially note 2, chapter 3 and note 6, chapter 4). Also, some useful results about how to attain an equilibrium for this model emerge from the theory of the core. Edgeworth’s model of pure exchange (1881) is a pioneering effort toward this end.
