UNSPECIFIED. (2004) Retrading in market games. JOURNAL OF ECONOMIC THEORY, 115 (1). pp. 151-181. ISSN 0022-0531

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Abstract

When agents are not price takers, they typically cannot obtain an efficient real location of resources in one round of trade. This paper presents a non-cooperative model of imperfect competition where agents can retrade allocations, consistent with Edgeworth's idea of recontracting. We show (a) there are Pareto optimal allocations, including competitive equilibrium allocations, that can be approximated arbitrarily closely when trade is myopic, i.e., when agents play a static Nash equilibrium at every round of retrading; (b) any converging sequence of allocations generated by myopic retrading can be supported along some retrade-proof subgame perfect equilibrium path when traders anticipate future rounds of trading. (C) 2003 Elsevier Science (USA). All rights reserved.

Item Type:	Journal Article
Subjects:	H Social Sciences > HC Economic History and Conditions
Journal or Publication Title:	JOURNAL OF ECONOMIC THEORY
Publisher:	ACADEMIC PRESS INC ELSEVIER SCIENCE
ISSN:	0022-0531
Date:	March 2004
Volume:	115
Number:	1
Number of Pages:	31
Page Range:	pp. 151-181
Identification Number:	10.1016/S0022-0531(03)00102-9
Publication Status:	Published
URI:	http://wrap.warwick.ac.uk/id/eprint/8722

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