EconPapers    
Economics at your fingertips  
 

Strategic freedom, constraint, and symmetry in one-period markets with cash and credit payment

Eric Smith () and Martin Shubik

Economic Theory, 2005, vol. 25, issue 3, 513-551

Abstract: In order to explain in a systematic way why certain combinations of market, financial, and legal structures may be intrinsic to certain capabilities to exchange real goods, we introduce criteria for abstracting the qualitative functions of markets. The criteria involve the number of strategic freedoms the combined institutions, considered as formalized strategic games, present to traders, the constraints they impose, and the symmetry with which those constraints are applied to the traders. We pay particular attention to what is required to make these “strategic market games” well-defined, and to make various solutions computable by the agents within the bounds on information and control they are assumed to have. As an application of these criteria, we present a complete taxonomy of the minimal one-period exchange economies with symmetric information and inside money. A natural hierarchy of market forms is observed to emerge, in which institutionally simpler markets are often found to be more suitable to fewer and less-diversified traders, while the institutionally richer markets only become functional as the size and diversity of their users gets large. Copyright Springer-Verlag Berlin/Heidelberg 2005

Keywords: Strategic market games; Clearinghouses; Credit evaluation; Default. (search for similar items in EconPapers)
Date: 2005
References: Add references at CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://hdl.handle.net/10.1007/s00199-003-0453-5 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Strategic Freedom, Constraint, and Symmetry in One-period Markets with Cash and Credit Payment (2004) Downloads
Working Paper: Strategic Freedom, Constraint, and Symmetry in One-period Markets with Cash and Credit Payment (2003) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:joecth:v:25:y:2005:i:3:p:513-551

Ordering information: This journal article can be ordered from
http://www.springer. ... eory/journal/199/PS2

DOI: 10.1007/s00199-003-0453-5

Access Statistics for this article

Economic Theory is currently edited by Nichoals Yanneils

More articles in Economic Theory from Springer, Society for the Advancement of Economic Theory (SAET) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

 
Page updated 2025-03-30
Handle: RePEc:spr:joecth:v:25:y:2005:i:3:p:513-551