Walras Retrouve: Decentralized Trading Mechanisms and the Competitive Price

Gianni De Fraja () and Jozsef Sakovics ()

ESE Discussion Papers from Edinburgh School of Economics, University of Edinburgh

Abstract: In this paper we extend the standard matching analysis of decentralized markets allowing for the possibility that some traders are matched to more than one trader on the opposite side of the market. In contrast to the literature, we are able to reconcile the Walrasian equilibrium with the outcome of decentralized strategic trade: we show that there exist matching mechanisms which determine local market conditions such that the equilibrium price and quantities are the same as would result in the Walrasian global market.

Keywords: Decentralised markets; Price formation; Walrasian equilibrium (search for similar items in EconPapers)
Date: 2004-04
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Journal Article: Walras Retrouve: Decentralized Trading Mechanisms and the Competitive Price (2001)
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Persistent link: http://EconPapers.repec.org/RePEc:edn:esedps:36

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