Noncooperative general exchange with a continuum of traders: Two models (Q1330871)

The authors consider a non-atomic exchange economy and associate with it two models of strategic market games with a (nonatomic) continuum of players. In the first model, the monetary instrument is just fiat money. The agents can create as much paper money as they want but possibly face overdraft penalties at the end of trading. In the second model, one of the initial commodities is used as numeraire. The authors distinguish three variants of the market game: buy and sell, sell-all and buy or sell. For both models, the authors establish precise relationships between strategic equilibria of the market game and the competitive equilibria of the corresponding exchange economy. The authors also recall the technical (measure-theoretic) difficulties raised by non-cooperative games with a continuum of players. They propose an original solution to the problem.