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Decentralization of the core through Nash equilibrium

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  • KOUTSOUGERAS, Leonidas
  • ZIROS, Nicholas

Abstract

We show that in large finite economies, core allocations can be approximately decentralized as Nash (rather than Walras) equilibrium. We argue that this excrcise is an essential complement to asymptotic core equivalence results, because it implies that in some approximate sense individual attempts to manipulate the decentralizing prices cannot be beneficial, which fits precisely the interpretation of asymptotic core convergence, namely the emergence of price taking.

Suggested Citation

  • KOUTSOUGERAS, Leonidas & ZIROS, Nicholas, 2008. "Decentralization of the core through Nash equilibrium," CORE Discussion Papers 2008026, Universit√© catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  • Handle: RePEc:cor:louvco:2008026
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    File URL: http://www.uclouvain.be/cps/ucl/doc/core/documents/coredp2008_26.pdf
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    Keywords

    core; Nash equilibrium; asymptotic proximity; decentralization.;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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