It simply states that capital market perfection, consumer rationality, and menu costs together are sufficient to guarantee that firms will not be able to move prices at will.
In the earlier section I demonstrated that capital market perfection, consumer rationality, and menu costs require all prices in an industry to move together.
Weak gross substitutability, together with consumer rationality, is known to be sufficient for the global stability of Walrasian equilibrium .
The empirical results support prospect theory and are contrary to two conclusions from neoclassical models of consumer rationality.
Neo-classical consumer rationality predicts a higher minimum acceptable subsidy on two grounds: the subsidy is in the future rather than at the time of purchase, and the receipt of the subsidy is subject to some risk of default.