Characterising competitive equilibrium in terms of opportunity

This paper analyses alternative ‘regimes’ (i.e. profiles of opportunity sets for individuals) for an exchange economy, without assuming that individuals act on coherent preferences. A Strong Opportunity Criterion is proposed. This extends the requirements of McQuillin and Sugden’s (2012) Opportunity Criterion to every set of individuals in an economy. The concept of a ‘market-clearing single-price regime’ (MCSPR), corresponding closely with competitive equilibrium, is defined. It is shown that every MCSPR satisfies the Strong Opportunity Criterion and that, as an economy increases in size, the set of regimes that satisfy the Strong Opportunity Criterion shrinks to the set of MCSPRs. JEL classification codes D51, D63.