Document Type
Discussion Paper
Publication Date
1-1-1973
CFDP Number
349
CFDP Pages
52
Abstract
A pairwise trading process is formulated subject to conditions of nonnegativity of traders’ holdings and quid pro quo. It is shown that that: (i) There is a centralized procedure that achieves the equilibrium allocation for an arbitrary economy. (ii) It is not in general possible to find a decentralized procedure that achieves the equilibrium allocation for an arbitrary economy. (iii) In a monetary economy there is a decentralized procedure that achieves the equilibrium allocation. The usefulness of money is that it allows decentralization of the trading process.
Recommended Citation
Ostroy, Joseph M. and Starr, Ross M., "Money and the Decentralization of Exchange" (1973). Cowles Foundation Discussion Papers. 582.
https://elischolar.library.yale.edu/cowles-discussion-paper-series/582