Schedule equilibria
Abstract
This paper studies general equilibrium when households and firms choose price-contingent schedules and market clearing determines prices. A unilateral schedule change therefore changes both an agent's realized allocation and the price at which it is evaluated. We call the resulting outcome a schedule equilibrium. The central object is the response of the clearing price to an agent's own schedule. This residual price response enters the household and firm first-order conditions, provides the strategic component of markups, and links conduct to observable equilibrium variation. We give conditions for existence, derive a trembling-hand refinement, and show how competitive, Cournot, and supply-function models arise as special cases. Applications to monopoly and vertical market power show how general-equilibrium feedback can alter familiar partial-equilibrium conclusions. We then allow firm mass, ownership, and technology to be endogenous. Free entry need not be efficient because entrants do not internalize their effect on the rest of the economy. Households choose capitalization and thereby ownership and firm creation, while investment moves active firms through production-function space. The same price-response mechanism therefore links market power, entry, ownership, and technological change within a common general-equilibrium framework.