To Trade or Not to Trade: Economies with a Variable Number of Tradeables

32 Pages Posted: 10 Jul 2003

See all articles by Robert P. Gilles

Robert P. Gilles

Queen's University Management School

Dimitrios I. Diamantaras

Temple University - Department of Economics

Abstract

We present a general equilibrium model that encompasses the endogenous selection and shadow-pricing of a set of tradeable commodities, with home-based and social production activities. In the model, a market system is a set of costly social institutions which embody the trade and production technologies available in the economy. Our equilibrium concept describes the pricing of market institutions, thus pricing the tradeability of a commodity. We obtain the existence and the decentralization of Pareto-efficient allocations. We discuss an example regarding the transition of a guild-based economy into a market-based economy.

Suggested Citation

Gilles, Robert P. and Diamantaras, Dimitrios I., To Trade or Not to Trade: Economies with a Variable Number of Tradeables. International Economic Review, Vol. 44, pp. 1173-1204, August 2003. Available at SSRN: https://ssrn.com/abstract=422995

Robert P. Gilles (Contact Author)

Queen's University Management School ( email )

25 University Sq
Belfast, Northern Ireland BT7 1NN
United Kingdom

Dimitrios I. Diamantaras

Temple University - Department of Economics ( email )

Philadelphia, PA 19122
United States

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