Abstract.
Hurwicz (1979) and Otani and Sicilian (1982, 1990) characterized the Nash equilibrium allocations of the Walrasian demand manipulation game in successively more general exchange environments. In this paper, I extend the analysis to production economies with short-selling. First, I generalize Hurwicz’s and Otani and Sicilian’s theorem that any allocation at which each agent’s consumption bundle lies above her true offer curve can be supported in Nash equilibrium. I then show that for finite economies of any size the set of such allocations is often topologically large.
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Received: 17 January 2003, Accepted: 4 April 2005,
JEL Classification:
D51, D82
For comments on this and earlier versions of the paper, I wish to thank Rick Bond, Bhaskar Chakravorti, Tom Gresik, Costas Syropoulos and William Thomson. I would especially like to thank Mike Jerison for helping to overcome a difficulty with a previous version. Also, the comments of the anonymous referees are gratefully acknowledged.
An erratum to this article is available at http://dx.doi.org/10.1007/s10058-005-0131-0.
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Kranich, L. Manipulation of the Walrasian mechanism in production economies with unbounded short-selling. Rev. Econ. Design 9, 109–125 (2005). https://doi.org/10.1007/s10058-005-0123-0
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DOI: https://doi.org/10.1007/s10058-005-0123-0