Journal of Mathematical Economics 3 (1976) 21 l-226. @ North-Holland Publishing Company EXCHANGE PROCESSES WITH PRICE ADJUSTMENT

The goal is to show: Main result. In apure exchange economy, an exchange,price adjustmentprocess, responsive to transaction costs, which does not stop unless forced to by market conditions, converges to a price equilibrium. There exist such processes starting from any state of any (pure exchange) economy. Before we present he mathematical model (section 2), we give some discus-sion. Studied here is a non-tatonnement process in a pure exchange conomy with price systems. Our treatment has much of the spirit of works published in 1962 by Uzawa, Hahn, Hahn and Negishi, Morishima and surveyed in Arrow-Hahn (1971, ch. 13). See especially the last reference for the history and discus-sion of the economic side of this problem. It is also the case that our treatment has a number of new and different features from the 1962 work. For one thing, our economic process is not supposed to satisfy some ordinary differential equation. Such a hypothesis implies too deterministic a setting for a state of an economy moving in time. Economic