The limit-price exchange process

Gaël Giraud

Cahiers de la Maison des Sciences Economiques from Université Panthéon-Sorbonne (Paris 1)

Abstract: We define a continuous-time trading process for Arrow-Debreu exchange economies such that (1) At each time, myopic traders play a (weakly) dominant strategy in Mertens' (2003) limit price strategic market game; (2) existence of continuous trade curves holds under weak conditions and in particular even if there is no static Walras equilibrium; (3) every trade curve converges to some Pareto optimal point; (4) for a generic choice of utilities and initial endowments, there is a piecewise unique trade curve, which is smooth and depends continuously upon initial conditions; (5) in the 2 x 2 case, for every interior starting point, the vector field corresponding to our dynamics is real-analytic; moreover, trade and price curves can be fully characterized and numerically simulated

Keywords: Non-tâtonnement; price-quantity dynamics; temporary equilibrium; limit-price mechanism; myopia (search for similar items in EconPapers)
JEL-codes: C61 C62 C68 D50 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2004-09
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:mse:wpsorb:b04118

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