Equilibrium existence in an overlapping generations model with altruistic preferences

Abstract

We prove the existence of a competitive equilibrium in an overlapping generations model with altruistic preferences and nonnegative bequests. In equilibrium, some sequences of agents of successive generations may be continually “linked” by positive bequests and act as infinitely lived agents. Other sequences of agents may not be so linked and therefore behave as sequences of finite lived agents. Thus, this paper adds to the literature on competitive equilibrium in dynamic models by endogenising the mix of finite and infinitely lived agents. We also discuss optimality and provide some examples which exhibit interesting equilibria.