Uniqueness of equilibrium and redistributive policies: a geometric approach to efficiency (2308.03706v1)

Abstract: This paper examines the relationship between resource reallocation, uniqueness of equilibrium and efficiency in economics. We explore the implications of reallocation policies for stability, conflict, and decision-making by analysing the existence of geodesic coordinate functions in the equilibrium manifold. Our main result shows that in an economy with M = 2 consumers and L goods, if L coordinate functions, representing policies, are geodesics on the equilibrium manifold (a property that we call the finite geodesic property), then the equilibrium is globally unique. The presence of geodesic variables indicates optimization and efficiency in the economy, while non-geodesic variables add complexity. Finally, we establish a link between the existing results on curvature, minimal entropy, geodesics and uniqueness in smooth exchange economies. This study contributes to the understanding of the geometric and economic properties of equilibria and offers potential applications in policy considerations. Keywords: Uniqueness of equilibrium, redistributive policies, geodesics, equilibrium manifold, equilibrium selection, curvature, geodesics.