Competitive economic systems: Stability, decomposition, and aggregation

The purpose of this work is to formulate, analyze, and resolve structural stability of competitive economic systems in the Hicks-Metzler algebraic setting by using mathematical methods of the comparison principle and the vector Liapunov functions. A large economy is decomposed into interrelated sub-economies with time-varying interactions. Stability of the economy is determined on the basis of the aggregated stability properties of subeconomies and the nature of their interactions. It is shown that classical Hicks conditions can be used in the decomposition-aggregation analysis to establish stability of nonlinear economic models subject to structural variations caused by the time-varying interactions among the individual subeconomies.