COWLES FOUNDATION FOR RESEARCH IN ECONOMICS
AT YALE UNIVERSITY

Box 208281
New Haven, CT 06520-8281

COWLES FOUNDATION DISCUSSION PAPER NO. 1431

UNIQUENESS OF EQUILIBRIUM IN THE MULTI-COUNTRY RICARDO MODEL

Herbert E. Scarf and Charles A. Wilson

July 2003

We present two arguments, one based on index theory, demonstrating that the multi-country Ricardo model has a unique competitive equilibrium if the aggregate demand functions exhibit gross substitutability. The result is somewhat surprising because the assumption of gross substitutability is sufficient for uniqueness in a model of exchange but not, in general, when production is included in the model.

Keywords: Ricardo model, Gross substitutes, Uniqueness

JEL Classification: D51, F11