COWLES FOUNDATION FOR RESEARCH IN ECONOMICS
AT YALE UNIVERSITY

Box 208281
New Haven, CT 06520-8281

COWLES FOUNDATION DISCUSSION PAPER NO. 650

"Stable Disequilibrium Prices:
Macroeconomics and Increasing Returns I"

Geoffrey M. Heal

November 1982

The paper establishes conditions for the existence of a set of prices which are stable and at which markets do not clear, providing a rigorous foundation for the existence of fixed-price equilibria via the macroeconomics of increasing returns. It analyzes a Walrasian price adjustment process for a general equilibrium economy with economies of scale in production.