Competitive Pricing in Socially Networked Economies

In the context of a socially networked economy, this paper demonstrates an Edgeworth equivalence between the set of competitive allocations and the core. Each participant in the economy may have multiple links with other participants and the equilibrium network may be as large as the entire set of participants. A clique is a group of people who are all connected with each other. Large cliques, possibly as large as the entire population, are permitted; this is important since we wish to include in our analysis large, world-wide organizations such as workers in multi-national ...rms and members of world-wide environmental organizations, for example, as well as small cliques, such as twoperson partnerships. A special case of our model is equivalent to a club economy where clubs may be large and individuals may belong to multiple clubs. The features of our model that cliques within a networked economy may be as large as the entire population and individuals may belong to multiple cliques thus allow us to extend the extant decentralisation literature on competitive pricing in economies with clubs and multiple memberships (where club sizes are uniformly bounded, independent of the size of the economy). 1The authors are indebted to John Conley, Frank Page and Ben Zissimos for helpful comments and for references to the literature.. 2This paper was submitted to the Athens General Equilibrium Conference in March of this year and is to be presented there in May 2002.