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Trade rules for uncleared markets

Kıbrıs, Özgür and Kucuksenel, Serkan (2005) Trade rules for uncleared markets. Social Science Working Paper, 1232. California Institute of Technology , Pasadena, CA. (Unpublished)

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We analyze markets in which the price of a traded commodity is such that the supply and the demand are unequal. Under standard assumptions, the agents then have single peaked preferences on their consumption or production choices. For such markets, we propose a class of Uniform Trade rules each of which determines the volume of trade as the median of total demand, total supply, and an exogenous constant. Then these rules allocate this volume "uniformly" on either side of the market. We evaluate these "trade rules" on the basis of some standard axioms in the literature. We show that they uniquely satisfy Pareto optimality, strategy proofness, no-envy, and an informational simplicity axiom that we introduce. We also analyze the implications of anonymity, renegotiation proofness, and voluntary trade on this domain.

Item Type:Report or Paper (Working Paper)
Additional Information:We gratefully acknowledge Ipek Gursel for a very useful observation. We also thank William Thomson, Tayfun Sonmez, Utku Unver, Anirban Kar as well as the seminar participants at Sabanci University, Koc University, ASSET 2004, SED 2004, and the Murat Sertel Memorial Conference on Economic Theory for their comments and suggestions on an earlier version of this paper.
Group:Social Science Working Papers
Subject Keywords:market disequilibrium, trade rule, efficiency, strategy proofness, anonymity, no-envy, renegotiation proofness, voluntary trade
Series Name:Social Science Working Paper
Issue or Number:1232
Classification Code:JEL: CD5, D6, D7
Record Number:CaltechAUTHORS:20170808-143010615
Persistent URL:
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:79956
Deposited By: Hanna Storlie
Deposited On:09 Aug 2017 18:38
Last Modified:03 Oct 2019 18:26

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