Inefficiency of smooth market mechanisms

P. Dubey; J. D. Rogawski

doi:10.1016/0304-4068(90)90004-S

Inefficiency of smooth market mechanisms

P. Dubey
, J. D. Rogawski

Economics

University of California at Los Angeles

Research output: Contribution to journal › Article › peer-review

18 Scopus citations

Abstract

We examine the efficiency properties of an abstractly given market mechanism. This consists of a smooth map from traders' strategy-choices to their net trades. When the number of traders is finite (the oligopolistic case), it is shown that Nash equilibria 'tend to be' inefficient for generic utilities. The phenomenon is analyzed via a certain set of 'optimal points' that are determined solely by the mechanism. In the last section we apply our results to the Hurwicz and Shapely-Shubik mechanisms by way of an illustration.

Original language	English
Pages (from-to)	285-304
Number of pages	20
Journal	Journal of Mathematical Economics
Volume	19
Issue number	3
DOIs	https://doi.org/10.1016/0304-4068(90)90004-S
State	Published - 1990

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abstract = "We examine the efficiency properties of an abstractly given market mechanism. This consists of a smooth map from traders' strategy-choices to their net trades. When the number of traders is finite (the oligopolistic case), it is shown that Nash equilibria 'tend to be' inefficient for generic utilities. The phenomenon is analyzed via a certain set of 'optimal points' that are determined solely by the mechanism. In the last section we apply our results to the Hurwicz and Shapely-Shubik mechanisms by way of an illustration.",

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AB - We examine the efficiency properties of an abstractly given market mechanism. This consists of a smooth map from traders' strategy-choices to their net trades. When the number of traders is finite (the oligopolistic case), it is shown that Nash equilibria 'tend to be' inefficient for generic utilities. The phenomenon is analyzed via a certain set of 'optimal points' that are determined solely by the mechanism. In the last section we apply our results to the Hurwicz and Shapely-Shubik mechanisms by way of an illustration.

UR - https://www.scopus.com/pages/publications/0001163068

U2 - 10.1016/0304-4068(90)90004-S

DO - 10.1016/0304-4068(90)90004-S

M3 - Article

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SN - 0304-4068

VL - 19

SP - 285

EP - 304

JO - Journal of Mathematical Economics

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IS - 3

ER -

Inefficiency of smooth market mechanisms

Abstract

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