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Existence of equilibrium


The demonstration that an equilibrium exists for an economic model or a game. An existence proof requires the demonstration that there is a simultaneous solution to the set of equations that describe the equilibrium. For example, the equations describing equilibrium of the Arrow-Debreu economy are obtained from the conditions for market clearing. Not all economic models possess an equilibrium: a competitive insurance market with adverse selection may have neither a pooling equilibrium nor a separating equilibrium.


Reference: Oxford Press Dictonary of Economics, 5th edt.