Xiong, Siyang; Zheng, Charles Zhoucheng

Journal of Economic Theory Vol. 137 no. 1 (November 2007): 246-270. (Originally published as WP #06037, November 2007)

In production economies, the extent to which non-equilibria are blocked depends on the allocation of control rights among shareholders, because a blocking coalition's resources are affected by the firms it jointly owns with outsiders. We formulate a notion of blocking that takes such interdependency problem into account, and we prove an analog of the Debreu-Scarf theorem for replica production economies. Our theorem differs from theirs in using an additional assumption, which we argue is indispensable and is driven by the interdependency problem.

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