Abstract
Brouwer's fixed point theorem cannot be constructively proved, so the existence of an equilibrium in a competitive economy also cannot be constructively proved. On the other hand, Sperner's lemma which is used to prove Brouwer's theorem is constructively proved. Some authors have presented a constructive (or an approximate) version of Brouwer's fixed point theorem using Sperner's lemma. In this paper, I prove the existence of an approximate equilibrium in a competitive economy directly by Sperner's lemma. Also I show that the existence of an approximate equilibrium leads to Sperner's lemma. I follow the Bishop style constructive mathematics according to Bishop and Bridges (1985), Bridges and Richman (1987), and Bridges and Vîţă (2006).
1. Introduction
It is often demonstrated that Brouwer’s fixed point theorem cannot be constructively proved. Thus, the existence of an equilibrium in a competitive economy also cannot be constructively proved. On the other hand, however, Sperner’s lemma which is used to prove Brouwer’s theorem is constructively proved. Some authors have presented a constructive (or an approximate) version of Brouwer’s fixed point theorem using Sperner’s lemma. Thus, Brouwer’s fixed point theorem can be constructively proved in its constructive version. See [1, 2]. Using this theorem, we can prove the existence of an approximate equilibrium in a competitive economy.
Then, can we prove the existence of an approximate equilibrium directly by Sperner’s lemma?
This paper presents such a proof and also shows that the existence of an approximate equilibrium leads to Sperner’s lemma. An approximate equilibrium in a competitive economy is a state such that excess demand for each good is smaller than for each .
In the next section, the proof of Sperner’s lemma will be presented. This proof is a standard constructive proof. In Section 3, the existence of an approximate equilibrium in a competitive exchange economy will be proved using Sperner’s lemma. In Section 4, it will be shown that the existence of an approximate equilibrium leads to Sperner’s lemma. I follow the Bishop style constructive mathematics according to Bishop and Bridges [3], Bridges and Richman [4], and Bridges and Vîţă [5].
2. Sperner’s Lemma
To prove Sperner’s lemma, we use the following simple result of graph theory, the Handshaking lemma (For another constructive proof of Sperner’s lemma, see [6].). A graph refers to a collection of vertices and a collection of edges that connect pairs of vertices. Each graph may be undirected or directed. Figure 1 is an example of an undirected graph. Degree of a vertex of a graph is defined to be the number of edges incident to the vertex, with loops counted twice. Each vertex has odd degree or even degree. Let denotes a vertex and denotes the set of all vertices.
Lemma 2.1 (the Handshaking lemma). Every undirected graph contains an even number of vertices of odd degree, that is, the number of vertices that have an odd number of incident edges must be even.
It is a simple lemma. But for completeness of arguments we provide a proof.
Proof. Prove this lemma by double counting. Let be the degree of vertex . The number of vertex-edge incidences in the graph may be counted in two different ways: by summing the degrees of the vertices or by counting two incidences for every edge. Therefore, where is the number of edges in the graph. The sum of the degrees of the vertices is therefore an even number. It could happen if and only if an even number of the vertices had odd degree.
Let denotes an -dimensional simplex. is a finite natural number. For example, a 2-dimensional simplex is a triangle. Let us partition or triangulate the simplex. Figure 2 is an example of partition (triangulation) of a 2-dimensional simplex. In a 2-dimensional case, we divide each side of in equal segments and draw the lines parallel to the sides of . is also a finite natural number. Then, the 2-dimensional simplex is partitioned into triangles. We consider partition of inductively for cases of higher dimension. In a 3-dimensional case, each face of is a 2-dimensional simplex, so it is partitioned into triangles in the way above mentioned, and draw the planes parallel to the faces of . Then, the 3-dimensional simplex is partitioned into trigonal pyramids, and similarly for cases of higher dimension.
Let denotes the set of small -dimensional simplices of constructed by partition. Vertices of these small simplices of are labeled with the numbers subject to the following rules: (1)the vertices of are respectively labeled 0 to . We label a point with 0, a point with 1, a point with point with , that is, a vertex whose th coordinate () is 1 and all other coordinates are 0 is labeled with ,(2)if a vertex of is contained in an -dimensional face of , then this vertex is labeled with some number which is the same as the number of a vertex of that face,(3)if a vertex of is contained in an -dimensional face of , then this vertex is labeled with some number which is the same as the number of a vertex of that face. And so on for cases of lower dimension,(4)a vertex contained inside of is labeled with an arbitrary number among .
A small simplex of which is labeled with the numbers is called a fully labeled simplex. Now, let us prove Sperner’s lemma.
Lemma 2.2 (Sperner’s lemma). If one labels the vertices of following above rules (1)~(4), then there are an odd number of fully labeled simplices. Thus, there exists at least one fully labeled simplex.
Proof. See the appendix.
3. Approximate Equilibrium in a Competitive Exchange Economy
Consider a competitive exchange economy. There are goods . is a finite natural number. The prices of the goods are denoted by . Let , and define Replace , respectively, by . Then, Thus, represents a point on an -dimensional simplex. Since consumers’ demand (excess demand) for each good in a competitive exchange economy is determined by relative prices of the goods, such notation yields no loss of generality. We denote the vector of excess demands for the goods when the vector of prices is by . Then, the following relation must hold: is equal to the sum of excess demands of all consumers for the good . By the budget constraint for each consumer, in a competitive economy the sum of excess demands of all consumers for each good must be 0. Adding the budget constraints for all consumers yields (3.3).
We assume that the excess demand function is uniformly continuous about the prices of the goods. Uniform continuity of means that for any , and , there exists such that depends on neither nor . Uniform continuity of demand functions implies that a slight price change yields only a slight demand change.
Consider the following function from the set of price vectors to the set of tuples of real numbers : With this, we define a function from an -dimensional simplex to itself as follows: Since and represents a point on . By the uniform continuity of , is also uniformly continuous.
Now, we show the following.
Theorem 3.1. In a competitive exchange economy, if the excess demand functions for the goods are uniformly continuous about their prices, then there exists an approximate equilibrium and one can constructively find the prices at the approximate equilibrium.
Proof. (1) First, we show that we can partition , which is the domain and range of , so that the conditions for Sperner’s lemma are satisfied. We partition according to the method in the proof of Sperner’s lemma (see the appendix) and label the vertices of simplices constructed by partition of . It is important how to label the vertices contained in the faces of . Let be the set of small simplices constructed by partition of , a vertex of a simplex of , and denote the th component of by . Then, we label a vertex according to the following rule:
where is a positive number. If there are multiple ’s which satisfy this condition, we label conveniently for the conditions of Sperner’s lemma to be satisfied. We do not randomly label the vertices.
For example, let be a point contained in an -dimensional face of such that for one among (the th component of its coordinates is 0). With , we have or (In constructive mathematics for any real number , we cannot prove that or , nor that or or . But for any distinct real numbers , and such that we can prove that or .). When , from , and , we have
Then, for at least one (denote it by ), we have and we label with , where is one of the numbers which satisfy . Since , does not satisfy this condition. When , implies . Since , we obtain
Then, for a positive number , we have
Thus, there is at least one () which satisfies . Denote it by , and we label with . is one of the numbers other than such that is satisfied. itself satisfies this condition (). But, since there is a number other than which satisfies this condition, we can select a number other than . We have proved that we can label the vertices contained in an -dimensional face of such that for one among with the numbers other than . By similar procedures, we can show that we can label the vertices contained in an -dimensional face of such that for two ’s among with the numbers other than those ’s, and so on.
Consider the case where . By similar procedures, we see that when or ,
Then, for at least one (denote it by ), we have and we label with . On the other hand, when and , we have
Then, for a positive number , we have
There is at least one which satisfies . Denote it by , and we label with .
Next, consider the case where for all other than . If for some , then we have , and label with . On the other hand, if for all , then we obtain . It implies . Thus, we can label with .
The conditions for Sperner’s lemma are satisfied, and there exists an odd number of fully labeled simplices in .
(2) Suppose that we partition sufficiently fine so that the distance between any pair of the vertices of small simplices is sufficiently small. Let , and be the vertices of a fully labeled simplex. We name these vertices so that are labeled, respectively, with . The values of at theses vertices are , and . The th components of and are denoted by and , and so on.
The uniform continuity of implies that we can select so that when the distance between and ( is smaller than , the distance between and () is smaller than . We can make satisfying (For example, for and , if when we have , then we have also when .). Suppose . About , from the labeling rules, we have . About , also from the labeling rules we have which implies . By the uniform continuity of , implies , which means . On the other hand, means . Thus, from
we obtain
By similar arguments, for each other than 0,
For , we have . Then,
Adding (3.17) and (3.18) side by side except for some (denote it by ) other than 0 yields
From , , we have , which is rewritten as
Since (3.17) implies , we have
Thus,
is derived. On the other hand, adding (3.17) from 1 to yields
From , , we have
Then, from (3.18) and (3.24), we get
Since is finite and and are positive numbers which may be arbitrarily small, and may also be arbitrarily small. Replacing by , from (3.22) and (3.25) we obtain the following result:
All points contained in the fully labeled simplex of satisfy this relation.
(3) Denote a point which satisfies (3.26) by , and denote its th component by . We have
Let us consider the relationship between the price and demand for each good in that case. From the definitions of and , and (because ), (3.27) means
Let . Then, we have . It is rewritten as
This means
From , there is a which satisfies . If for all such holds, that is, excess demands for all goods with positive prices are positive, we cannot cancel out because the price of any good cannot be negative and the Walras law (3.3) is violated (Even if we relax the Walras law to the following approximate Walras law, we can show essentially the same result: , where is a positive number. If we have for all which satisfy , this inequality cannot be satisfied because the price of any good cannot be negative.). Therefore, as well as must be a positive number which may be arbitrarily small, and since is finite, is a real number which may also be arbitrarily small. There exists a number which is only slightly larger than . Replace by such a number, and denote it by . Then, for all we have
This means that excess demand for each good is smaller than . Such a state is an approximate equilibrium. In the approximate equilibrium when , we must have for any because if we have , and then the Walras law is violated. On the other hand, there may be excess supply (negative excess demand) for a good whose price is zero.
4. From the Existence of an Approximate Equilibrium to Sperner’s Lemma
In this section, we will derive Sperner’s lemma from the existence of an approximate equilibrium in a competitive economy. Let us partition an -dimensional simplex . Denote the set of small -dimensional simplices of constructed by partition by . Vertices of these small simplices of are labeled with the numbers similarly to the proof of Sperner’s lemma. Denote vertices of an -dimensional simplex of by , the th component of by , and the label of by . Let be a positive number which is smaller than for all , and define a function as follows: denotes the th component of . From the labeling rules for all , and so is well defined. Since , we have We extend to all points in the simplex by convex combinations of its values on the vertices of the simplex. Let be a point in the -dimensional simplex of whose vertices are . Then, and are represented as follows: Let us show that is uniformly continuous. Let and be distinct points in the same small -dimensional simplex of . They are represented as and so Then, we have and for each , Since is finite, appropriately selecting given for each , we can make sufficiently small corresponding to the value of for each , and so make sufficiently small corresponding to the value of . Thus, is uniformly continuous.
Now, using , we construct an excess demand function as follows: and is defined by Each is uniformly continuous, and satisfies the Walras law as shown below. Multiplying (the th component of ) to (4.9) for each and adding them from 0 to yields Therefore, ’s satisfy the conditions for excess demand functions and there exists an approximate equilibrium. Let be the price vector at the approximate equilibrium. Then, from (see (3.31)), we have for all , where is an positive number. Since it is impossible that at the approximate equilibrium for satisfying because of (4.11), we have for such . On the other hand, for such that , we have . Therefore, is obtained. Adding this inequality side by side from 0 to yields From , we obtain Further, from (4.12) and (4.14), we get Since and are finite, is a positive real number which may be arbitrarily small. There exists a number which is only slightly larger than . Replace by such a number, and denote it by . Then, , that is, is derived. This relation holds for all .
Let and be a point in , where is a -neighborhood of . If is sufficiently small, uniform continuity of means for any and for all . is the th component of . Let be a simplex of which contains , and be the vertices of . Then, and are represented as Equation (4.2) implies that if only one among is labeled with , we have is the th component of .
Since may be arbitrarily small and , this means Equation (4.17) is satisfied with for all . On the other hand if no is labeled with , we have and then (4.17) cannot be satisfied. Thus, for each one and only one must be labeled with . Therefore, must be a fully labeled simplex. We have completed the proof of Sperner’s lemma.
5. Concluding Remark
In this paper, I have presented a proof of the existence of an approximate equilibrium in a competitive economy directly by Sperner’s lemma from a viewpoint of constructive mathematics. In another paper [7], I apply this method to prove the existence of an approximate Nash equilibrium in a finite strategic game (a strategic game with a finite number of players and a finite number of pure strategies).
Appendix
Proof of Sperner’s Lemma
We prove this lemma by induction about the dimension of . When , we have only one point with the number 0. It is the unique 0-dimensional simplex. Therefore, the lemma is trivial. When , a partitioned 1-dimensional simplex is a segmented line. The endpoints of the line are labeled distinctly, by 0 and 1. Hence, in moving from endpoint 0 to endpoint 1, the labeling must switch an odd number of times, that is, an odd number of edges labeled with 0 and 1 may be located in this way.
Next, consider the case of 2 dimension. Assume that we have partitioned a 2-dimensional simplex (triangle) as explained above. Consider the face of labeled with 0 and 1 (We call edges of triangle faces to distinguish between them and edges of a dual graph which we will consider later.). It is the base of the triangle in Figure 3. Now, we introduce a dual graph that has its nodes in each small triangle of plus one extra node outside the face of labeled with 0 and 1 (putting a dot in each small triangle and one dot outside ). We define edges of the graph that connect two nodes if they share a side labeled with 0 and 1. See Figure 3. White circles are nodes of the graph, and thick lines are its edges. Since from the result of 1-dimensional case there are an odd number of faces of labeled with 0 and 1 contained in the face of labeled with 0 and 1, there are an odd number of edges which connect the outside node and inside nodes. Thus, the outside node has odd degree. Since by the Handshaking lemma there are an even number of nodes which have odd degree, we have at least one node inside the triangle which has odd degree. Each node of our graph except for the outside node is contained in one of small triangles of . Therefore, if a small triangle of has one face labeled with 0 and 1, the degree of the node in that triangle is 1; if a small triangle of has two such faces, the degree of the node in that triangle is 2, and if a small triangle of has no such face, the degree of the node in that triangle is 0. Thus, if the degree of a node is odd, it must be 1 and then the small triangle which contains this node is labeled with 0, 1 and 2 (fully labeled). In Figure 3, triangles which contain one of the nodes , , are fully labeled triangles.
Now, assume that the theorem holds for dimensions up to . Assume that we have partitioned an -dimensional simplex . Consider the fully labeled face of which is a fully labeled -dimensional simplex. Again, we introduce a dual graph that has its nodes in small -dimensional simplices of plus one extra node outside the fully labeled face of (putting a dot in each small -dimensional simplex and one dot outside ). We define the edges of the graph that connect two nodes if they share a face labeled with . Since from the result of -dimensional case there are an odd number of fully labeled faces of small simplices of contained in the -dimensional fully labeled face of , there are an odd number of edges which connect the outside node and inside nodes. Thus, the outside node has odd degree. Since, by the Handshaking lemma there are an even number of nodes which have odd degree, we have at least one node inside the simplex which has odd degree. Each node of our graph except for the outside node is contained in one of small -dimensional simplices of . Therefore, if a small simplex of has one fully labeled face, the degree of the node in that simplex is 1; if a small simplex of has two such faces, the degree of the node in that simplex is 2, and if a small simplex of has no such face, the degree of the node in that simplex is 0. Thus, if the degree of a node is odd, it must be 1 and then the small simplex which contains this node is fully labeled.
If the number (label) of a vertex other than vertices labeled with of an -dimensional simplex which contains a fully labeled -dimensional face is , then this -dimensional simplex has one such face, and this simplex is a fully labeled -dimensional simplex. On the other hand, if the number of that vertex is other than , then the -dimensional simplex has two such faces.
We have completed the proof of Sperner’s lemma.
Since and partition of are finite, the number of small simplices constructed by partition is also finite. Thus, we can constructively find a fully labeled -dimensional simplex of through finite steps.
Acknowledgments
The author thanks the anonymous referees for their very useful comments. This research was partially supported by the Ministry of Education, Science, Sports and Culture of Japan, Grant-in-Aid for Scientific Research (C), no. 20530165, and the Special Costs for Graduate Schools of the Special Expenses for Hitech Promotion by the Ministry of Education, Science, Sports and Culture of Japan in 2010.