Market clearing and price formation

Sjur Flåm and O. Godal

Journal of Economic Dynamics and Control, 2008, vol. 32, issue 3, 956-977

Abstract: Considered here is decentralized exchange of privately owned commodity bundles. Voluntary transactions take the form of repeated bilateral barters. Under broad and reasonable hypotheses the resulting process converges to competitive equilibrium. Price-taking behavior is not assumed. Prices emerge over time; they need neither be anticipated nor known at any interim stage.

Date: 2008
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Working Paper: Market clearing and price formation (2007)
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