Negishi (1962) suggested that price adjustment was a means to attain a particular optimum rather than an equilibrium; this provides the starting point for the present paper. Using a gradient process to arrive at an optimum, the paper shows that with proper distribution of endowments, this process may be considered to be an actual price adjustment process. The role of a proper distribution is investigated further and related to the existing literature. It is also shown that if the distribution of endowments satisfy certain regularity features then the equilibrium will be globally stable under the classical price adjustment rule where price adjustment is proportional to excess demand.

Keywords: tatonnement, gradient process, optimum, global stability, uniqueness, exchange model, distribution of endowments.

JEL Classification Numbers: C62, C61, D50

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