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When Walras meets Vickrey

Author

Listed:
  • Delacrétaz, David

    (Department of Economics, University of Manchester)

  • Loertscher, Simon

    (Department of Economics, University of Melbourne)

  • Mezzetti, Claudio

    (School of Economics, University of Queensland)

Abstract

We consider general asset market environments in which agents with quasilinear payoffs are endowed with objects and have demands for other agents' objects. We show that if all agents have a maximum demand of one object and are endowed with at most one object, the VCG transfer of each agent is equal to the largest net Walrasian price of this agent. Consequently, the VCG deficit is equal to the sum of the largest net Walrasian prices over all agents. Generally, whenever Walrasian prices exist, the sum of the largest net Walrasian prices is a non-negative lower bound for the deficit, implying that no dominant-strategy mechanism runs a budget surplus while respecting agents' ex post individual rationality constraints.

Suggested Citation

  • Delacrétaz, David & Loertscher, Simon & Mezzetti, Claudio, 2022. "When Walras meets Vickrey," Theoretical Economics, Econometric Society, vol. 17(4), November.
    • Handle: RePEc:the:publsh:4296
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    References listed on IDEAS

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    Cited by:

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    2. Loertscher, Simon & Marx, Leslie M., 2023. "Asymptotically optimal prior-free asset market mechanisms," Games and Economic Behavior, Elsevier, vol. 137(C), pages 68-90.

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    More about this item

    Keywords

    Asset markets; efficient trade; VCG deficit; largest net Walrasian prices;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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