Competitive Market Mechanisms as Social Choice Procedures

Designing a strategyproof spot market mechanism with many traders: twenty-two steps to Walrasian equilibrium

“…Finally, following the analysis in Hammond (1987Hammond ( , 2011 as well as Guesnerie (1998), we note that the demand revelation mechanisms built around Steps 6 and 17 are multilaterally strategy proof in the sense that, for each finite coalition C ⊂ L × T , there is no combination of misreported demand correspondences and hidden trades on the side that makes every member of C better off.…”

“…To ensure that it does, it is important to avoid the difficulty created by Arrow's (1951) exceptional case, especially in the later versions considered by Koopmans (1957) and many others, including Hammond (2011). This difficulty can be attributed to the misguided attempt to create a market for a good g ∈ G even when no trader has any endowment of g, so g can never be traded.…”

Allocation Mechanisms, Incentives, and Endemic Institutional Externalities

“…Indeed, there is the well-known relation between perfectly competitive markets for private goods, with or without lump-sum wealth redistribution, and the Pareto efficient allocation of private goods. On this topic, this is not the occasion to try to add to the survey chapter Hammond (2011). In the presence of externalities or public goods, however, given any competitive market allocation of private goods, there will usually be Pareto superior reallocations of private goods and externalities together.…”

“…As acknowledged in Hammond (1979), it was Hurwicz (1972) himself who observed that the competitive mechanism is incentive compatible in a large economy. Sections 14 and 15 of Hammond (2011) are devoted to a survey of the results that hold in such environments. There is a broad class of environments in which strategyproof exchange is possible, even in the presence of tax mechanisms such as those studied in Guesnerie (1995).…”