A symmetric allocation in a continuum is "multilaterally incentive compatible" if no finite coalition of privately informed agents can manipulate it by combining deception with hidden trades of exchangeable goods. Sufficient conditions for mutilateral compatibility are that all agents face the same linear prices for exchangeable goods and that indistinguishable agents face identical budget sets. The same conditions are necessary under assumptions that extend those under which the second efficiency theorem of welfare economics holds in a continuum economy. Markets for exchangeable goods emerge as binding constraints on the set of Pareto efficient allocations with private information. Copyright 1987 by The Review of Economic Studies Limited.
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