S-Space College of Social Sciences (사회과학대학) Institute of Economics Research (경제연구소) Seoul Journal of Economics (SJE) Seoul Journal of Economics vol.21 no.1~4 (2008)
On the Stability of Hellers Coordination Failure Model
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- Issue Date
- Seoul Journal of Economics, Vol.21 No.3, pp. 485-500
- This paper reconsiders Heller's multisector Cournot-Nash model(Heller 1986) hat is known as one of the representative models of coordination failure. In Heller's model, there are muliple Pareto-anked equilibria if the price elasticity of demand is highly inelastic near the subsistence level. This paper analyzes the stability of those equilibria and show that the inferior equilibrium is unstable while the superior equilibrium is stable. Therefore, the coordination failure does not emerge in Heller's model.
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