Non fixed-price trading rules in single-crossing classical exchange economies

Mridu Goswami ()

Social Choice and Welfare, 2015, vol. 44, issue 2, 389-422

Abstract: This paper defines the single-crossing property for two-agent, two-good exchange economies with classical (i.e., continuous, strictly monotonic, and strictly convex) individual preferences. Within this framework and on a rich single-crossing domain, the paper characterizes the family of continuous, strategy-proof and individually rational social choice functions whose range belongs to the interior of the set of feasible allocations. This family is shown to be the class of generalized trading rules. This result highlights the importance of the concavification argument in the characterization of fixed-price trading rules provided by Barberá and Jackson (Econometrica 63:51–87, 1995 ), an argument that does not hold under single-crossing. The paper also shows how several features of abstract single-crossing domains, such as the existence of an ordering over the set of preference relations, can be derived endogenously in economic environments by exploiting the additional structure of classical preferences. Copyright Springer-Verlag Berlin Heidelberg 2015

Date: 2015
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DOI: 10.1007/s00355-014-0834-7

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