Trade rules for uncleared markets
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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References listed on IDEAS
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- Bettina Klaus & Hans Peters & Ton Storcken, 1997.
"Reallocation of an infinitely divisible good,"
Springer;Society for the Advancement of Economic Theory (SAET), vol. 10(2), pages 305-333.
- Ching, Stephen, 1992. "A simple characterization of the uniform rule," Economics Letters, Elsevier, vol. 40(1), pages 57-60, September.
- 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.
- Bettina Klaus & Hans Peters & Ton Storcken, 1998. "Strategy-proof division with single-peaked preferences and individual endowments," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 15(2), pages 297-311.
- Barbera, Salvador & Jackson, Matthew O, 1995.
Econometric Society, vol. 63(1), pages 51-87, January.
- H. Moulin, 1980. "On strategy-proofness and single peakedness," Public Choice, Springer, vol. 35(4), pages 437-455, January.
- 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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