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Walras’s law of markets as special case of the general Triangle Theorem: a laconic proof

Kakarot-Handtke, Egmont (2013): Walras’s law of markets as special case of the general Triangle Theorem: a laconic proof.

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Abstract

From the set of the first three structural axioms follows the - economic - triangle theorem. It asserts that the product of the three key ratios, which characterize the firm, the market outcome, and the income distribution, is always equal to unity. The theorem contains only unit-free variables, is testable in principle, and involves no behavioral assumptions. The differentiated triangle theorem applies to an arbitrary number of firms. Therefrom Walras’s Law can be derived without recourse to demand and supply functions or the notion of equilibrium.

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