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Reaching Market Equilibrium Merely by Bilateral Barters

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  • Sjur Didrik Flåm

Abstract

Motivated by emission and resource markets, this paper considers repeated, bilateral barters between owners of commodity bundles, contingent claims, or property rights. Focus is on feasible, voluntary exchanges, driven only by differences in substitution rates. No coordination is ever needed. The modelling complies with adaptive learning, behavioral economics, and decentralized decision-making. Presuming transferable utility, the paper provides sufficient conditions for convergence to market equilibrium. It is expedient that some parties have differentiable objectives or make strictly feasible choices.

Suggested Citation

  • Sjur Didrik Flåm, 2013. "Reaching Market Equilibrium Merely by Bilateral Barters," CESifo Working Paper Series 4504, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_4504
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    File URL: http://www.cesifo-group.de/DocDL/cesifo1_wp4504.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    bilateral exchange; market equilibrium; transferable utility; common price; supergradients; stability; convergence;

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies

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