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Trade rules for uncleared markets

Özgür Kýbrýs and Serkan Küçükþenel
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Özgür Kýbrýs: Sabancý University
Serkan Küçükþenel: California Institute of Technology

Authors registered in the RePEc Author Service: Özgür Kıbrıs () and Serkan Küçükşenel ()

Microeconomics from EconWPA

Abstract: We analyze markets in which the price of a traded commodity is such that the supply and the demand are unequal. Under standard assumptions, the agents then have single peaked preferences on their consumption or production choices. For such markets, we propose a class of Uniform Trade rules each of which determines the volume of trade as the median of total demand, total supply, and an exogenous constant. Then these rules allocate this volume 'uniformly' on either side of the market. We evaluate these 'trade rules' on the basis of some standard axioms in the literature. We show that they uniquely satisfy Pareto optimality, strategy proofness, no-envy, and an informational simplicity axiom that we introduce. We also analyze the implications of anonymity, renegotiation proofness, and voluntary trade on this domain.

Keywords: market disequilibrium; trade rule; efficiency; strategy proofness; anonymity; no-envy; renegotiation proofness; voluntary trade (search for similar items in EconPapers)
JEL-codes: D5 D6 D7 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-fmk and nep-int
Date: 2005-08-04
Note: Type of Document - pdf; pages: 23
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