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In this note, we give another version of the generalized Gale-Nikaido-Debreu lemma which has as direct corollary the usual
statement without weakening any conclusion. We give also another simple way for discarding free disposability.
In a paper published in 1982, one of the two authors of this note gave a lemma presented as the
most convenient version for applications in general equilibrium theory of the generalized statement
of the Gale-Nikaido-Debreu lemma:
Lemma I (Florenzano). Let P be a closed convex cone with vertex 0 in R’, B the closed ball with
center 0 and radius 1, S the sphere with same center and same radius and 1 an upper semi-continuous
and non-empty, compact convex-valued correspondence from B n P into R’. If [ satisfies the condition
A very simple proof of Lemma 1 was based upon the Brouwer’s fixed-point theorem and the
concept of partition of unity subordinated to a covering. It was evident from the proof that { does
not need to be compact-valued but only such that l(p) - P” is closed for each p in B f~ P. In
particular, if P is the whole space (PO = {0}), we had as corollary:
Note also that the point p, of which Lemma 1 and Corollary 1 demonstrate the existence, is not
proved # 0. Actually, one can easily check that 0 is the unique point j7 E B such that 0 E l(p),
where l(p) = { -p} for every p E B, and thus verifies the assumptions of Corollary 1. This
Corollary 2 (Le Van). Under the assumptions of Lemma 1 on B, S and P, let Q be a closed subset of
B n P containing S n P and such that there exists a retraction r from B onto Q. If [ is an upper
semi-continuous and non-empty, compact convex-valued correspondence from Q into I?%‘,satisfying the
condition
Proof Let {‘: B n P + [w’ be defined by {‘( p) = {(r(p)). Since r is continuous, {’ is upper
semi-continuous. Since the restriction r/Q is the identity Q --$ Q, {’ satisfies the condition
By Lemma 1, there exists p E B n P such that l’(p) n P” f fl; 5 = r(p) E Q and satisfies
$(p)nP%@ Q.E.D.
Corollary 3 (Debreu). Let P be a closed convex cone with vertex 0 in Iw’ which is not a lineur subspace;
let PO, B and S be as in Lemma 1. If [ is an upper semi-continuous and non-empt_y, compact
convex-valued correspondence from S n P into Iw’ satisfying the condition
Proof Corollary 3 is deduced from Corollary 2 by proving the existence of a retraction from B onto
S n P. Firstly since B n P is convex and closed, as previously the projection of R’ on B n P is a
retraction r’ from B onto B n P. Then since P is not a linear subspace of R’, there exists a non-null
vector v E P” n (-P) [see Border (1985, Propositions 2-18)] and w = -v/II v I] E S n P n (-PO), If
x E B n P, let r(x) be the unique point of S n P such that r(x) = x + X(x)w, with X(x) = -x. w +
((x . w)* + 1 - I]x (I *)l/*. One can easily see that r is a retraction from B n P onto S n P. r 0 r’ is a
retraction from B onto S n P and it follows from Corollary 2 that there exists p E S n P such that
5(p) n PO f @ Q.E.D.
Remark. Corollary 3 can be used for example if P is a closed half-space. This obvious remark
suggests a very simple trick, alternative to that one used by Bergstrom (1976), for proving the
existence of a transitive general quasi-equilibrium without free disposability.
M. Florenznno, C. Le Vun / Existence ofgeneralequilibrium 109
A pure exchange economy 6= ((Xl, R’, w’); i = 1,. . . , m) is defined by m consumption sets
X1 c R’, for each i, a complete preorder R’ on X’ and an initial endowment o’ E R’. The strict
preference relation corresponding to R’ is
Let us define
y’(p)= {XLEX’~p~x’~p~o~},
G’(p)={xiEX’Ip.x’<p.wl},
~i(p)=(~‘~X’)~‘~y’(p)and6’(p)~P’(x’)=~},
ProoJ: For (p, q) E S’ (unit-sphere of RI+‘), with p E Iw’ and q E [w+, let us define
Using the same techniques as in Geistdoerfer-Florenzano (1982) one can show that 0 is an upper
semi-continuous correspondence from S’ n (R’ X R’ +) into [w’+l, with non-empty, compact convex-
values. One has
Then by Corollary 3, there exist ( p, 4) E S’ n (R’ X R +) and a negative number t such that
E X’ = F o1,
t= -m.
r=l I=1
Vi= 1 ,..., m, p . X’ = jj . a’ + q.
Hence mq= 0 - ij= 0 *j? E S”. Finally, there exists p E S’-’ and X= (X’) E nlm_iX’ such that
References
Bergstrom, T.C.. 1976, How to discard free disposability At no cost, Journal of Mathematical Economics 3, 131-134.
Border, K.C., 1985, Fixed point theorems with applications to economics and game theory (Cambridge University Preab.
Cambridge).
Cornet, B.. 1975. Fixed point and subjectivity theorems for correspondences: Applications, Working paper no. 7521
(University of Paris, Dauphine. Paris).
Debreu. Cr., 1956, Market equilibrium. Proceedings of the National Academy of Sciences of the U.S.A. XLII. 876-878.
Geistdoerfer-Florenano, M.. 1982, The Gale-Nikaido-Debreu lemma and the existence of transitive equilibrium with or
without the free-disposal assumption. Journal of Mathematical Economics 9, 113-134.