Implementation of the Walrasian correspondence: the boundary problem
Consider exchange economies in which preferences are continuous, convex and strongly monotonic. It is well known that the Walrasian correspondence is not Nash implementable. Maskin monotonicity (Maskin, 1999) is violated for allocations at the boundary of the feasible set. We derive an impossibility result showing that it is in fact not implementable in any solution concept. Next, we construct a sequential mechanism based on price-allocation announcements that fits the very description of Walrasian Equilibrium. Imposing an additional domain restriction, we show that it fully implements the Walrasian correspondence in subgame perfect and strong subgame perfect equilibrium. We thus take care of the boundary problem that was prominent in the Nash implementation literature.
|Date of creation:||00 Sep 2005|
|Date of revision:|
|Contact details of provider:|| Postal: Voie du Roman Pays 34, 1348 Louvain-la-Neuve (Belgium)|
Fax: +32 10474304
Web page: http://www.uclouvain.be/core
More information through EDIRC
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.:
- GIRAUD, Gaël & ROCHON, Céline, 2001.
"Consistent collusion-proofness and correlation in exchange economies,"
CORE Discussion Papers
2001018, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Giraud, Gael & Rochon, Celine, 2002. "Consistent collusion-proofness and correlation in exchange economies," Journal of Mathematical Economics, Elsevier, vol. 38(4), pages 441-463, December.
- Eric Maskin, 1999. "Nash Equilibrium and Welfare Optimality," Review of Economic Studies, Oxford University Press, vol. 66(1), pages 23-38.
- Andrew Postlewaite & David Wettstein, 1989. "Feasible and Continuous Implementation," Review of Economic Studies, Oxford University Press, vol. 56(4), pages 603-611.
- Guoqiang Tian, 2000. "Feasible and Continuous Double Implementation of Constrained Walrasian Allocations," Annals of Economics and Finance, Society for AEF, vol. 1(1), pages 19-32, May.
- William Thomson, 2004.
RCER Working Papers
510, University of Rochester - Center for Economic Research (RCER).
- Abreu, Dilip & Sen, Arunava, 1990. "Subgame perfect implementation: A necessary and almost sufficient condition," Journal of Economic Theory, Elsevier, vol. 50(2), pages 285-299, April.
- Bhaskar Dutta & Arunava Sen & Rajiv Vohra, 1994. "Nash implementation through elementary mechanisms in economic environments," Review of Economic Design, Springer;Society for Economic Design, vol. 1(1), pages 173-203, December.
- Roberto Serrano & Rajiv Vohra, 1997. "Non-cooperative implementation of the core," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 14(4), pages 513-525.
- Muhamet Yildiz, 2002.
Theory workshop papers
505798000000000003, UCLA Department of Economics.
- Takashi Kunimoto & Roberto Serrano, 2002.
"Bargaining and Competition Revisited,"
2002-14, Brown University, Department of Economics.
- Thomson, W., 1996.
"Monotonic Extension on Economic Domains,"
RCER Working Papers
431, University of Rochester - Center for Economic Research (RCER).
- Schmeidler, David, 1980. "Walrasian Analysis via Strategic Outcome Functions," Econometrica, Econometric Society, vol. 48(7), pages 1585-93, November.
- Gale, Douglas M, 1986. "Bargaining and Competition Part II: Existence," Econometrica, Econometric Society, vol. 54(4), pages 807-18, July.
- L. Hurwicz, 1979. "Outcome Functions Yielding Walrasian and Lindahl Allocations at Nash Equilibrium Points," Review of Economic Studies, Oxford University Press, vol. 46(2), pages 217-225.
- Moore, John & Repullo, Rafael, 1988. "Subgame Perfect Implementation," Econometrica, Econometric Society, vol. 56(5), pages 1191-1220, September.
When requesting a correction, please mention this item's handle: RePEc:cor:louvco:2005060. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Alain GILLIS)
If references are entirely missing, you can add them using this form.