Edgeworth Market Games: Price‐Taking and Efficiency

Abstract

This article surveys the Edgeworth market game literature, which formalizes multiagent trading as a game. The key issues are two fold, whether, as the economy becomes large, (i) price‐taking emerges, and (ii) whether efficiency is obtained. The focus here is on production economies under partial equilibrium, where the two questions converge to a single one, that is if the equilibrium approximates the competitive one in the limit. We however also discuss related approaches to market games, in particular (i) the cooperative approach, (ii) the trading post literature, and (iii) Cournot competition under general equilibrium.