Decentralized Pure Exchange Processes on Networks

We define a class of pure exchange Edgeworth trading processes that under minimal assumptions converge to a stable set in the space of allocations, and characterise the Pareto set of these processes. Choosing a specific process belonging to this class, that we define fair trading, we analyse the trade dynamics between agents located on a weighted network. We determine the conditions under which there always exists a one-to-one map between the set of networks and the set of limit points of the dynamics, and derive an analog of the Second Welfare Theorem for networks. This result is used to understand what is the effect of the network topology on the trade dynamics and on the final allocation