NEAR-MARKETS AND MARKET GAMES

Abstract

Abstract : The market game, both in its side payment and no side payment versions, has provided a valuable tool for the utilization of game theoretic analysis for the study of exchange economies. It is known that exchange economies map into totally balanced games for both side payments and no side payments. It is known that totally balanced side payment games map into exchange economies and it is conjectured, but not yet proved or counter-exampled, that every totally balanced no side payment game is representable by an exchange economy. In this paper the author consider the relationship of market games and near-market games to economies with complexities beyond that of the exchange economy. They argue that a broad class of economies generate near-market games, including private goods economies with non-convexities, coalition production economies, and economies with local public goods. It is also suggested that economies with pure public goods do not, without special restrictions, give rise to near-market games. More specifically, they say that a sequence of replica games is a sequence of near-market games if the games are superadditive and the sequence satisfies a near - minimum efficient scale for coalitions property -- all increasing returns to coalition size are eventually exhausted.