Noncooperative games, coupling constraints, and partial efficiency
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Many noncooperative settings require sharing of aggregate holdings—be these of natural resources, production tasks, or pollution permits. This paper considers instances where the shared items eventually become competitively priced. For that reason, the solution concept incorporates features of Nash and Walras equilibria. Focus is on how the concerned agents, by themselves, may reach an outcome of such sort. A main mechanism is direct bilateral exchange, repeated time and again.
KeywordsCoupling constraints Normalized Nash equilibrium Partial efficiency Bilateral exchange Monotonicity Stability Convergence
JEL ClassificationC62 C72 D43 D62
Thanks are due: for support CESifo, München and the Arne Ryde Foundation, Lund–and for hospitality the University of Alicante.
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