Knowledge that Transforms

IN THIS PAPER, we study the existence of a general equilibrium in an economy in which some of the firms behave competitively, whereas others follow special pricing rules. An even casual observation of economic reality confirms the need for the inclusion of price setting firms in the study of general equilibrium models. And, in fact, this has been emphasized in the economic literature for some time. We consider this a sufficient justification to present a general equilibrium model which allows for both types of behavior-price setting as well as price taking behavior. The model to be presented will account for a wide range of price setting rules. We, however, find it appropriate to point out at the start that not all economically relevant price setting rules are covered. Although our model permits the drawing of useful conclusions for the general equilibrium theory of oligopolistic competition through prices, it is not especially designed for that purpose. In particular, our results are not applicable to the general equilibrium analysis with price making monopolistic firms, a subject on which there exists some literature.2 Our motivation as well as our modelling options and assumptions are directed to two fields where an increased interest in the theoretical foundations recently could be noticed.

On propose un ensemble d'axiomes caracterisant uniquement la solution de Harsanyi pour des jeux d'utilite non transferable

[The paper proves sufficient conditions for aggregate demand curves to be decreasing in an economy with identical consumers. The restrictions affect the functional form of Engel curves and the shape of expenditures distribution within the economy. It is shown that most of the empirical literature about Engel curves uses functional forms of the type studied here. Eventually, conditions about expenditures distribution are empirically tested.]

[This paper presents general results on the existence and properties of expected-utility-maximizing search rules for problems in which searchers may choose both the number of periods in which samples are taken and the size of the sample taken in each period. These rules include fixed-sample-size rules and sequential rules as special cases. Also presented are conditions sufficient for sequential and fixed-sample-size rules to be optimal.]

[This paper studies the limits of contracting as a method for achieving efficient allocation, with particular attention to how informational asymmetries interact with the timing of commitment to a mechanism. There are arguments to suggest, in the spirit of the Coase "Theorem," that if agents can agree on a mechanism before observing their private information (or, a fortiori, if information is perfect or symmetric), they can realize an incentive-efficient allocation. If, however, agents observe their private information before contracting, there may be further restrictions, due to information leakage during the process of bargaining over mechanisms, on what they can achieve by contract. These restrictions are characterized and compared to those proposed for this setting by Holmstrom and Myerson [6]. It is also shown that there is at least one specification of the rules that govern mechanism design that makes it possible for agents to achieve, contracting after they observe their private information, the same incentive-efficient allocations that are attainable when they can commit themselves to a mechanism before observing their private information.]

On caracterise les axiomes faible et fort de preference revelee en termes de m-rationalite. Cette caracterisation eclaire le lien fondamental avec les axiomes de comportement de Richter pour la g-rationalite. L'approche presentee ici, est motivee par un operateur de complementarite, defini sur des preferences, qui montre le rapport logique entre ces deux concepts de choix rationnel

This paper considers a market where pairs of agents who are interested in carrying out a transaction are brought together by a stochastic process and, upon meeting, initiate a bargaining process over the terms of the transaction.The basic bargaining problem is treated with the strategic approach.The paper derives the steady state equilibrium agreements; analyzes their dependence on market conditions such as the relative numbers of agents of different types; and discusses their relations with the competitive equilibrium outcome and other results in the search equilibrium literature.1133

We study two-sided in which agents are buyers and sellers or firms and workers or men and women. The agents are to form partnerships (which provide them with satisfaction) and at the same time make monetary transfers (e.g. salaries or dowries). The core of this market game is shown to have a particularly nice structure so that precise answers can be given to questions concerning comparative statics and manipulability. THE IDEA OF USING Walrasian equilibrium as a mechanism for making allocations with desirable properties of fairness and efficiency has been studied extensively. The scheme involves having agents specify their supply and demand functions. The competitive equilibria are then calculated and allocations are made accordingly. In general this procedure may run into two difficulties: first, nonuniqueness-if there are several equilibria there may be no fair way to decide which one should be implemented; and second, manipulability-if there is only one equilibrium an informed agent may be able to influence it by suitably falsifying his demand data. However, as we will show here, using the Walrasian mechanism does work remarkably well for a certain class of important markets. These are the matching markets of our title and they include for single items, like houses, where it is assumed that traders do not wish to acquire more than one item. They also include labor in which it is desired to match workers with jobs at suitable salaries, academic markets in which students are to be assigned to educational institutions, marriage markets where men and women are matched through negotiating of dowries. It turns out that in these both the problems of nonuniqueness and manipulability can be resolved in a