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Trade rules for uncleared markets

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Author Info

  • Özgür Kýbrýs

    (Sabancý University)

  • Serkan Küçükþenel

    (California Institute of Technology)

Abstract

We analyze markets in which the price of a traded commodity is such that the supply and the demand are unequal. Under standard assumptions, the agents then have single peaked preferences on their consumption or production choices. For such markets, we propose a class of Uniform Trade rules each of which determines the volume of trade as the median of total demand, total supply, and an exogenous constant. Then these rules allocate this volume 'uniformly' on either side of the market. We evaluate these 'trade rules' on the basis of some standard axioms in the literature. We show that they uniquely satisfy Pareto optimality, strategy proofness, no-envy, and an informational simplicity axiom that we introduce. We also analyze the implications of anonymity, renegotiation proofness, and voluntary trade on this domain.

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File URL: http://128.118.178.162/eps/mic/papers/0508/0508002.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Microeconomics with number 0508002.

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Length: 23 pages
Date of creation: 04 Aug 2005
Date of revision:
Handle: RePEc:wpa:wuwpmi:0508002

Note: Type of Document - pdf; pages: 23
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Web page: http://128.118.178.162

Related research

Keywords: market disequilibrium; trade rule; efficiency; strategy proofness; anonymity; no-envy; renegotiation proofness; voluntary trade;

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References

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  1. Ching, Stephen, 1992. "A simple characterization of the uniform rule," Economics Letters, Elsevier, vol. 40(1), pages 57-60, September.
  2. Salvador Barbera & Matthew O. Jackson, 1993. "Strategy-Proof Exchange," Discussion Papers 1021, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  3. H. Moulin, 1980. "On strategy-proofness and single peakedness," Public Choice, Springer, vol. 35(4), pages 437-455, January.
  4. Bettina Klaus & Hans Peters & Ton Storcken, 1997. "Reallocation of an infinitely divisible good," Economic Theory, Springer, vol. 10(2), pages 305-333.
  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.
  6. Bettina Klaus & Hans Peters & Ton Storcken, 1998. "Strategy-proof division with single-peaked preferences and individual endowments," Social Choice and Welfare, Springer, vol. 15(2), pages 297-311.
  7. Thomson, W., 1991. "Resource-Monotonic Solutions to the Problem of Fair Divosion when Preferences are Single-Peaked ," RCER Working Papers 301, University of Rochester - Center for Economic Research (RCER).
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Cited by:
  1. Sanjeev K. Routray, 2006. "Two Kinds of Activism: Reflections on Citizenship in Globalising Delhi," Working Papers id:463, eSocialSciences.
  2. Mennicken, Andrea, 2010. "From inspection to auditing: Audit and markets as linked ecologies," Accounting, Organizations and Society, Elsevier, vol. 35(3), pages 334-359, April.

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