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Consistent Solutions in Exchange Economies: A Characterization of the Price Mechanism

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Nir Dagan

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Abstract

We characterize the Walrasian allocations correspondence by means of four axioms: consistency, replica invariance, individual rationality and Pareto optimality. It is shown that for any given class of exchange economies any solution that satisfies the axioms is a selection from the Walrasian allocations with slack. Preferences are assumed to be smooth, but may be satiated and non--convex. A class of economies is defined as all economies whose agents' preferences belong to an arbitrary family (finite or infinite) of types. The result can be modified to characterize equal budget Walrasian allocations with slack by replacing individual rationality with individual rationality from equal division. The results are valid also for classes of economies in which core--Walras equivalence does not hold.

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Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 141.

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Date of creation: Nov 1995
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Handle: RePEc:upf:upfgen:141

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Peleg, B, 1986. "On the Reduced Game Property and Its Converse," International Journal of Game Theory, Springer, vol. 15(3), pages 187-200.
  2. van den Nouweland, A. & Peleg, B. & Tijs, S., 1996. "Axiomatic characterizations of the Walras correspondence for generalized economies," Journal of Mathematical Economics, Elsevier, vol. 25(3), pages 355-372. [Downloadable!] (restricted)
  3. Thomson, William & Zhou, Lin, 1993. "Consistent Solutions in Atomless Economies," Econometrica, Econometric Society, vol. 61(3), pages 575-87, May. [Downloadable!] (restricted)
  4. Peleg, Bezalel, 1985. "An axiomatization of the core of cooperative games without side payments," Journal of Mathematical Economics, Elsevier, vol. 14(2), pages 203-214, April. [Downloadable!] (restricted)
  5. Thomson William, 1994. "Consistent Solutions to the Problem of Fair Division When Preferences Are Single-Peaked," Journal of Economic Theory, Elsevier, vol. 63(2), pages 219-245, August. [Downloadable!] (restricted)
  6. Thomson, William, 1988. "A study of choice correspondences in economies with a variable number of agents," Journal of Economic Theory, Elsevier, vol. 46(2), pages 237-254, December. [Downloadable!] (restricted)
  7. Lensberg, Terje, 1988. "Stability and the Nash solution," Journal of Economic Theory, Elsevier, vol. 45(2), pages 330-341, August. [Downloadable!] (restricted)
  8. Nir Dagan, 1996. "A Note on Thomson's Characterizations of the Uniform Rule," Economic theory and game theory 003, Nir Dagan. [Downloadable!]
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  9. Champsaur, Paul & Laroque, Guy, 1981. "Fair allocations in large economies," Journal of Economic Theory, Elsevier, vol. 25(2), pages 269-282, October. [Downloadable!] (restricted)
  10. Hart, Sergiu & Mas-Colell, Andreu, 1989. "Potential, Value, and Consistency," Econometrica, Econometric Society, vol. 57(3), pages 589-614, May. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Luisa Fuster, 1995. "Altruism, Uncertain Lifetime, and the Distribution of Wealth," Economics Working Papers 150, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
  2. José V. Rodríguez Mora, 1995. "Shared Knowledge," Economics Working Papers 144, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
  3. Nir Dagan, 1996. "Consistency and the Walrasian Allocations Correspondence," Economics Working Papers 151, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
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  4. Sjaak Hurkens & Nir Vulkan, 1996. "Information Acquisition and Entry," Economics Working Papers 155, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
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  5. Daron Acemoglu & Fabrizio Zilibotti, 1996. "Agency Costs in the Process of Development," Economics Working Papers 157, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
    Other versions:
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