Donald Brown, Distinguished Fellow 2006
Donald Brown’s contributions to economics are remarkable in their variety, originality and depth.
His first work in economics, some of it done jointly with the great mathematician Abraham Robinson, was to represent the concept of perfect competition by an economy with a nonstandard number of infinitesimal agents. Don demonstrated the existence of a nonstandard equilibrium and showed that it was identical to the nonstandard core.
The paper, “Testable Restrictions on the Equilibrium Manifold,” written jointly with Rosa Matzkin, initiated an entirely new field which has been actively pursued by many subsequent scholars. They presented a system of inequalities that observations on market prices, individual incomes and aggregate endowments must satisfy to be consistent with the equilibrium behavior of some pure trade economy.
Responding to work of Hugo Sonnenschein, Rolf Mantel and Gerard Debreu, demonstrating that no significant behavior implied by individual utility maximization is preserved in the aggregate, he and Chris Shannon exhibited even more negative results on the implications of the Walrasian model. They showed that a finite data set can never be used to refute the hypothesis that equilibria are locally unique or locally stable or that equilibrium comparative statics are locally monotone.
His work with Geoffrey Heal on equilibrium analysis in economies with non-convex technologies illuminated the major problem of economies of scale and its treatment by alternatives to conventional profit maximization. They showed that partial equilibrium prescriptions for the regulation of a public monopoly can be seen as marginal or average cost pricing equilibria.
His paper on incomplete markets with Peter DeMarzo and Curtis Eaves is an extremely significant piece of research. In equilibrium models with incomplete markets, demand functions are typically not continuous at prices for which a marketed asset becomes redundant. They showed, however, that this discontinuity disappears if a new asset is introduced when such redundancies occur. This assumption allowed them to prove generic existence and also to compute equilibria in the general equilibrium with incomplete markets case.
As further proof of his breadth, Don has made important contributions to econometrics and to the study of economies with infinitely many goods.
He is highly regarded for his leadership as chairman of Yale’s Department of Economics. He has been a wonderful colleague, teacher and warm friend both to fellow researchers and to young students.