Cournot-Walras and locally consistent equilibria
Abstract A kth-order locally consistent equilibrium (k-LCE) is an imperfectly competitive general equilibrium allocation at which firms perceive only a kth-order Taylor expansion of their true demand curves. It is shown that, under simple regularity conditions, the set of kth-order locally consistent equilibrium strategies coincides with the set of Cournot-Walras equilibria as soon as k ⩾ 1. In addition, a characterization of the set of Negishi equilibria (or 0-LCEs) and an existence result for 1-LCEs in private ownership economies are provided.