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Strict Fairness of Equilibria in Mixed and Asymmetric Information Economies

Chiara Donnini () and Maria Laura Pesce ()
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Chiara Donnini: Università di Napoli Parthenope
Maria Laura Pesce: Università di Napoli Federico II

CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy

Abstract: We investigate the fairness property of equal-division competitive market equilibria (CME) in asymmetric information economies with a space of agents that may contain non-negligible (large) traders. We first propose an extension to our framework of the notion of strict fairness due to Zhou (1992). We prove that once agents are asymmetrically informed, any equal-division CME allocation is strictly fair, but a strictly fair allocation might not be supported by an equilibrium price. Then, we investigate the role of large traders and we provide two sufficient conditions under which, in the case of complete information economies, a redistribution of resources is strictly fair if and only if it results from a competitive mechanism.

Keywords: Asymmetric information; mixed markets; strict fairness; competitive equilibrium. (search for similar items in EconPapers)
JEL-codes: D43 D60 D82 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm, nep-com, nep-gth and nep-mic
Date: 2019-04-08
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