ON THE ROLE OF A MONEY COMMODITY IN A TRADING PROCESS

An exchange economy is considered, where commodities are exchanged in subsets of traders. No trader gets worse off during the process. As shown by counterexample, the process may converge to a non-Pareto-optimum when a money commodity assumption is dropped. 1 The Exchange Economy... Consider an exchange economy of the following type: There are n traders and m commodities, with n> (m+1). The initial endowment of trader j is wj ∈ Rm+. It is assumed that ∑n j=1 wj> 0. An allocation x = (x1, x2... xn) is an elemen