New method proves stability of equilibrium in economic systems.
The article proves two theorems about the stability of equilibrium using a new method based on Liapounov's work. The method involves a function that decreases over time, leading to equilibrium. The first theorem shows the existence and stability of equilibrium points when cross-elasticities are nonnegative. The second theorem focuses on local stability, as global stability is not always possible. The study builds on previous work by Walras and Samuelson, exploring the concept of equilibrium in economic models.