Walras Retrouve: Decentralized Trading Mechanisms and the Competitive Price
AbstractIn this paper we extend the standard matching analysis of decentralized markets allowing for the possibility that some traders are matched to more than one trader on the opposite side of the market. In contrast to the literature, we are able to reconcile the Walrasian equilibrium with the outcome of decentralized strategic trade: we show that there exist matching mechanisms which determine local market conditions such that the equilibrium price and quantities are the same as would result in the Walrasian global market.
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Bibliographic InfoPaper provided by Edinburgh School of Economics, University of Edinburgh in its series ESE Discussion Papers with number 36.
Date of creation: Apr 2004
Date of revision:
Decentralised markets; Price formation; Walrasian equilibrium;
Other versions of this item:
- Gianni De Fraja & Jozsef Sakovics, 2001. "Walras Retrouve: Decentralized Trading Mechanisms and the Competitive Price," Journal of Political Economy, University of Chicago Press, vol. 109(4), pages 842-863, August.
- NEP-ALL-2004-06-02 (All new papers)
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