scientific article; zbMATH DE number 1541910
The author examines a mathematical model of market exchange. Firstly he explains why a modification of existing models has to considered. The aim is to shorten the gap between the economic nature and the mathematical formulation. The author provides an extended historical survey from the monograph ``Mathematical Psychics (1932; Zbl 0005.17402) of \textit{F. Y. Edgeworth} to contemporary works. He clarifies economic realities which force to improve and complicate mathematical description, especially he treats the problem of price formation at a market. Merits and demerits of various approaches such as cooperative and non-cooperative games, Walras exchange, bargaining schemes are discussed. An initial point is the Marshallian market with a finite number of agents, which is a model of \textit{A. Rubinstein} and \textit{A. Wolinsky} [Econometrica 53, 1133-1150 (1985; Zbl 0582.90010)]. The author's model contains continuum sets of buyers and sellers, but there is a finite number of kinds of buyers and sellers. Agents of the same kind estimate a unit of good with some fixed value. At moments \(t=1, 2,\dots\) buyers and sellers randomly match pairs and try to execute trading. With probability 1/2 any agent of the pair proposes his price, if it is acceptable for another side, then these agents make a bargain and leave the market. Otherwise, they take part at matching of pairs at the next period. A discount factor \(\delta\) decreases a sum of bargain at the moment \(t\) by \(\delta(t-1)\). Therefore, there are no common price at the market, and due to infiniteness of the number of agents the process of bargaining is endless. The prices of exchanges converge to some common limit, the discount \(\delta\) may bring them to zero. The author modifies this scheme to different economic models. The number of agents may be finite, the discount may be omitted, the bargaining rules are subject to change. Thus, the author adapts mathematical assumptions to bring features of mathematical model in correpondence with a certain economic theory. He examines the existence and uniqueness of equilibrium and perfect competition of the market. The book is not recommanded for a first acquaintance with mathematical applications in economics. Arguments and inferences of the author are valuable for those who develop and analyze mathematical models in economics. The range of topics is focused on competitive markets, process of bargaining and existence of equilibrium. Nevertheless, his steady aspiration to draw together mathematical formalisation and economic reality is very attractive for everybody who makes efforts to take advantage of mathematical approach to contemporary economic theories.
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