Walras Retrouvé: Decentralized Trading Mechanisms and the Competitive Price | Zendy

Gianni De Fraja | Zendy; József Sákovics | Zendy

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Walras Retrouvé: Decentralized Trading Mechanisms and the Competitive Price

Author(s) -

Gianni De Fraja,

József Sákovics

Publication year - 2001

Publication title -

journal of political economy

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 21.034

H-Index - 186

eISSN - 1537-534X

pISSN - 0022-3808

DOI - 10.1086/322087

Subject(s) - economics , matching (statistics) , outcome (game theory) , microeconomics , general equilibrium theory , competitive equilibrium , contrast (vision) , computer science , statistics , mathematics , artificial intelligence

We extend the standard analysis of decentralized markets to allow for the possibility that traders interact simultaneously with more than one trader on the opposite side of the market. In contrast with the liter- ature, we reconcile the Walrasian equilibrium with the outcome of decentralized strategic trade: we show that there exist generic match- ing technologies that determine local market conditions such that, as market frictions vanish, the equilibrium price is the one that would result in the static Walrasian market. Our analysis highlights the im- portance of local market conditions for the determination of equilib- rium prices.

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