Walras retrouve' : Decentralized trading mechanisms and the competitive price

G DeFraja, J Sakovics

Research output: Contribution to journalArticlepeer-review

Abstract

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 literature, we reconcile the Walrasian equilibrium with the outcome of decentralized strategic trade: we show that there exist generic matching 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 importance of local market conditions for the determination of equilibrium prices.

Original languageEnglish
Pages (from-to)842-863
Number of pages22
JournalJournal of Political Economy
Volume109
Issue number4
Publication statusPublished - Aug 2001

Keywords

  • EQUILIBRIUM
  • AUCTIONS
  • MARKETS
  • COMPETITION
  • INFORMATION
  • BIDDERS
  • SELLERS
  • SEARCH
  • NUMBER
  • DESIGN

Fingerprint

Dive into the research topics of 'Walras retrouve' : Decentralized trading mechanisms and the competitive price'. Together they form a unique fingerprint.

Cite this