Efficiency and separability in economies with a trade center

D. Diamantaras, R.P. Gilles, P.H.M. Ruys

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We discuss the endogenous selection of a costly allocation mechanism in a pure exchange economy. The allocation mechanism is modeled as an abstract trade center exhibiting setup costs, access costs and linear transaction costs. Exactly one trade center has to be selected. We define Pareto efficiency in this setting and decentralize decision making concerning consumption as well as the choice of a trade center through the concept of a separable valuation equilibrium. In this equilibrium concept trade centers are assigned individualized nonlinear prices.
Original languageEnglish
PublisherUnknown Publisher
Number of pages15
Publication statusPublished - 1994

Publication series

NameCentER Discussion Paper


  • Efficiency
  • International Trade
  • Costs
  • Allocation
  • Separability
  • international economics


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