We analyze markets in open
economies in which the price of a traded commodity is fixed and as a result of
this stickiness, the demand and the supply are possibly unequal. In our model,
the agents have single peaked preferences on their consumption and production
choices. For such markets, we analyze the implications of population changes as
formalized by the well-known “consistency”
property. We first characterize the subclass of “Uniform trade rules”
that satisfies Pareto optimality,
no-envy, and consistency.
Next, we add an informational simplicity property which is called “independence of trade volume” and we
show that among the “Uniform trade rules” that satisfy Pareto optimality, no-envy, and consistency, only the one that clear either the short or long
side of the market satisfies independence
of trade volume.
We analyze markets in open economies in
which the price of a traded commodity is fixed and as a result of this
stickiness, the demand and the supply are possibly unequal. In our model, the
agents have single peaked preferences on their consumption and production
choices. For such markets, we analyze the implications of population changes as
formalized by the well-known “consistency”
property. We first characterize the subclass of “Uniform trade rules”
that satisfies Pareto optimality,
no-envy, and consistency.
Next, we add an informational simplicity property which is called “independence of trade volume” and we
show that among the “Uniform trade rules” that satisfy Pareto optimality, no-envy, and consistency, only the one that clear either the short or long
side of the market satisfies independence
of trade volume.
Journal Section | ARTICLES |
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Authors | |
Publication Date | July 14, 2017 |
Submission Date | March 31, 2017 |
Acceptance Date | June 21, 2017 |
Published in Issue | Year 2017 Volume: 5 Issue: 1 |