Universality and Efficiency of Price Mechanism based on an Expansion Possibility of Economies

Kohzo Shiraishi (), Ken Urai () and Hiromi Murakami ()
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Kohzo Shiraishi: Faculty of Economics, Kobegakuin University
Ken Urai: Graduate School of Economics, Osaka University
Hiromi Murakami: Graduate School of Economics, Osaka University

No 16-10, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: In this paper, we axiomatically characterize the universality and efficiency of price mechanism based on an expansion possibility of economic environments like trading opportunities, immigrants, agents' consumption sets through the cultural globalization, and so on. Together with some generalized settings like economy dependent message-response structure, we base our argument on the framework of Sonnenschein (1974). In Sonnenschein (1974), the price mechanism is characterized in more specific way than that of Hurwicz (1960), Mount and Reiter (1974), etc. for the informational efficiency problem. His model, however, has an advantage to describe the universality and efficiency of the price mechanism from the category-theoretic viewpoint through the basic economic tool of the excess demand function. His approach also enables us to characterize the price mechanism through cooperative game theoretic settings like the core quivalence that is closely related to the replica stability axiom of social choice settings like Thomson (1988) and Nagahisa (1994).

Keywords: Price Mechanism; Axiomatic Characterization; Informational Efficiency; Universality; Mes- sage Mechanism; Cultural Globalization (search for similar items in EconPapers)
JEL-codes: D50 D71 (search for similar items in EconPapers)
Pages: 12 pages
Date: 2016-05
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