On mixed markets with asymmetric information

Abstract

In asymmetric information exchange economies involving both non-negligible and negligible agents, one should expect the failure of the private Core-Walras Equivalence Theorem. This paper shows that if “large” traders are similar to each other, then they lose their market power and hence the Equivalence Theorem can be restored. We also investigate on weaker equivalences among Walrasian expectations allocations, Aubin private core and private core allocations of the original mixed economy and the atomless one associated to it, without the assumption that all atoms are of the same type. Furthermore, extensions of Herves-Moreno-Yannelis and Schmeidler Theorems (compare Herves et al. in J Math Econ 41:844–856, 2005a; Schemidler in Econometrica 40:579–580, 1972) are given for differential information economies in which the feasibility constraints are imposed with an equality (exact feasibility).