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Stability and Universal Implementability of the Price Mechanism

Author

Listed:
  • Kohzo Shiraishi

    (Faculty of Economics, Kobegakuin University)

  • Ken Urai

    (Graduate School of Economics, Osaka University)

  • Hiromi Murakami

    (School of Business Administration, Kwansei Gakuin University)

Abstract

An axiomatic characterization of price or market mechanisms is one of the most important problems in general equilibrium theory. Based on the general equilibrium framework and the characterization of the price mechanism, this paper provides a new perspective or a uni ed viewpoint on some axioms in social choice theory and a setting for the informational efficiency problem of the allocation mechanisms. Our arguments focus on a contemporary reconsideration and generalization of the category theoretic method in Sonnenschein (1974) and the replica stability arguments in social choice theory like Thom- son (1988) and Nagahisa (1994). Sonnenschein's axiomatic characterization of the price mechanism is extended to an economy-dependent welfare form of a universal implementability theorem. The frame- work provides new methods and general settings in treating mechanisms with messages or information, and many social choice axioms. Our result also has an important economic interpretation that the price mechanism can be characterized as a universal rule that is stable in assuring sufficiently high utility levels for each member of a small economy relative to its large expansions.

Suggested Citation

  • Kohzo Shiraishi & Ken Urai & Hiromi Murakami, 2018. "Stability and Universal Implementability of the Price Mechanism," Discussion Papers in Economics and Business 18-16, Osaka University, Graduate School of Economics.
    • Handle: RePEc:osk:wpaper:1816
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    References listed on IDEAS

    as
    1. Jordan, J. S., 1982. "The competitive allocation process is informationally efficient uniquely," Journal of Economic Theory, Elsevier, vol. 28(1), pages 1-18, October.
    2. Mount, Kenneth & Reiter, Stanley, 1974. "The informational size of message spaces," Journal of Economic Theory, Elsevier, vol. 8(2), pages 161-192, June.
    3. Ken Urai & Hiromi Murakami, 2017. "Local Independence, Monotonicity, Incentive Compatibility and Axiomatic Characterization of Price-Money Message Mechanism," Discussion Papers in Economics and Business 17-08, Osaka University, Graduate School of Economics.
    4. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
    5. Gerard Debreu, 1963. "On a Theorem of Scarf," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 30(3), pages 177-180.
    6. Urai, Ken & Murakami, Hiromi, 2016. "Replica core equivalence theorem: An extension of the Debreu–Scarf limit theorem to double infinity monetary economies," Journal of Mathematical Economics, Elsevier, vol. 66(C), pages 83-88.
    7. Sonnenschein, Hugo, 1974. "An Axiomatic Characterization of the Price Mechanism," Econometrica, Econometric Society, vol. 42(3), pages 425-433, May.
    8. Osana, Hiroaki, 1978. "On the informational size of message spaces for resource allocation processes," Journal of Economic Theory, Elsevier, vol. 17(1), pages 66-78, February.
    9. Ken Urai & Hiromi Murakami, 2015. "An Axiomatic Characterization of the Price-Money Message Mechanism," Discussion Papers in Economics and Business 15-31-Rev., Osaka University, Graduate School of Economics, revised Mar 2016.
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    More about this item

    Keywords

    Price Mechanism; Axiomatic Characterization; Category Theory; Informational Effi- ciency; Universal Implementability; Message Mechanism;
    All these keywords.

    JEL classification:

    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations

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