Equilibrium Blocking in Large Quasilinear Economies

Brown Economics Working Paper Series

42 Pages Posted: 12 Oct 2009

See all articles by Yusuke Kamishiro

Yusuke Kamishiro

Kanto Gakuin University - College of Economics

Roberto Serrano

Brown University

Date Written: October 8, 2009

Abstract

We study information transmission in large interim quasilinear economies using the theory of the core. We concentrate on the core with respect to equilibrium blocking, a core notion in which information is transmitted endogenously within coalitions, as blocking can be understood as an equilibrium of a communication mechanism used by players in coalitions. We consider independent, ex-post and signal-based replicas of the basic economy. For each, we offer an array of negative and positive convergence results as a function of the complexity of the mechanisms used by coalitions. We identify conditions under which asymmetric information remains as an externality and non-market outcomes stay in the core, as well as those for the core to converge to the set of incentive compatible ex-post Walrasian allocations. Further, all the results are robust to the relaxation of the incentive constraints, and hence suggest a process through which information may get incorporated into a fully revealing equilibrium price function.

Keywords: Core w.r.t. Equilibrium Blocking, Core Convergence, Independent

JEL Classification: C71, C72, D51, D82

Suggested Citation

Kamishiro, Yusuke and Serrano, Roberto, Equilibrium Blocking in Large Quasilinear Economies (October 8, 2009). Brown Economics Working Paper Series. Available at SSRN: https://ssrn.com/abstract=1485543 or http://dx.doi.org/10.2139/ssrn.1485543

Yusuke Kamishiro (Contact Author)

Kanto Gakuin University - College of Economics ( email )

1-50-1 Mutsuura-higashi
Kanazawa-ku
Yokohama, Kanagawa 236-8501
Japan

Roberto Serrano

Brown University ( email )

64 Waterman Street
Providence, RI 02912
United States
401-863-1036 (Phone)
401-863-1970 (Fax)

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