This paper presents a general equilibrium model in which all prices and quantities transacted are explicitly chosen by economic agents: there is no Walrasian auctioneer. Multiple equilibria occur with prices and wages taking their Walrasian values. Equilibrium quantities may also be Walrasian, or they may involve some price-taking workers being rationed in selling labor. This involuntary unemployment results from self-confirming expectations of inadequate effective demand, as in some interpretations of J. M. Keynes' ideas.

The LeChatelier principle, in the form introduced into economics by Paul A. Samuelson, asserts that at a point of long-run equilibrium, the derivative of long-run compensated demand with respect to own price is larger in magnitude than the derivative of short-run compensated demand. We introduce an extended LeChatelier principle that applies also to large price changes and to uncompensated demand as well as to a wide range of concave and nonconcave maximization problems outside the scope of demand theory. This extension also clarifies the intuitive basis of the principle.

We develop an ordinal approach to comparing the equilibria of economic models. Its main advantages over the traditional approach based on signing derivatives are that (i) it utilizes only a subset of the assumptions, resulting in a simpler theory that facilitates focusing attention on the economics rather than the mathematics, (ii) it applies to discrete changes, even when there are multiple equilibria and when some equilibria do not vary smoothly with the parameters, and (iii) it incorporates a formal theory of the robustness of conclusions to assumptions, which helps modelers distinguish which assumptions are "critical" to their comparative-statics conclusions.

Manufacturing is undergoing a revolution. The mass production model is being replaced by a vision of a flexible multiproduct firm that emphasizes quality and speedy response to market conditions while utilizing technologically advanced equipment and new forms of organization. Our optimizing model of the firm generates many of the observed patterns that mark modern manufacturing. Central to our results is a method of handling optimization and comparative statics problems that requires neither differentiability nor convexity.

This paper presents a general-equilibrium model in which all prices and quantities transacted are the direct choices of econom ic agents: there is no Walrasian auctioneer. Multiple subgame perfect equilibria exist with prices and wages at their Walrasian levels. Among the equilibrium allocations are the Walrasian ones, but there a re also outcomes in which price- and wage-taking workers are rationed in the labor market and are unable to sell all the labor they want a t the prevailing wage. This involuntary unemployment results from sel f-fulfilling expectations of inadequate excess demand as in some inte rpretations of Keynes's ideas.