Trade rules for uncleared markets
AbstractWe 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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Bibliographic InfoPaper provided by EconWPA in its series Microeconomics with number 0508002.
Length: 23 pages
Date of creation: 04 Aug 2005
Date of revision:
Note: Type of Document - pdf; pages: 23
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market disequilibrium; trade rule; efficiency; strategy proofness; anonymity; no-envy; renegotiation proofness; voluntary trade;
Other versions of this item:
- D5 - Microeconomics - - General Equilibrium and Disequilibrium
- D6 - Microeconomics - - Welfare Economics
- D7 - Microeconomics - - Analysis of Collective Decision-Making
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-08-13 (All new papers)
- NEP-FMK-2005-08-13 (Financial Markets)
- NEP-INT-2005-08-13 (International Trade)
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