Walras Retrouve: Decentralized Trading Mechanisms and the Competitive Price

Posted: 28 Aug 2001

See all articles by Gianni De Fraja

Gianni De Fraja

University of Nottingham; Universita' di Roma; Centre for Economic Policy Research (CEPR)

Jozsef Sakovics

The University of Edinburgh

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.

Suggested Citation

De Fraja, Gianni and Sakovics, Jozsef, Walras Retrouve: Decentralized Trading Mechanisms and the Competitive Price. Journal of Political Economy, Vol. 109, August 2001, Available at SSRN: https://ssrn.com/abstract=275344

Gianni De Fraja (Contact Author)

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

Universita' di Roma ( email )

Dipartimento SEFEMEQ
Via Columbia n.2
Rome, Rome 00133
Italy

HOME PAGE: http://www.economia.uniroma2.it/docenti

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Jozsef Sakovics

The University of Edinburgh ( email )

30 Buccleuch Place
Edinburgh, EH8 9JT, Scotland
United Kingdom

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