Martin Osborne; Ariel Rubinstein

Published On


Page Range

pp. 137–156


  • English

Print Length

19 pages

An exchange economy

This chapter discusses a market in which the goods can be consumed in any quantity: they are divisible. As in the previous chapter, the ownership of goods is recognized and protected.

Each individual initially owns a bundle of goods. We look for a distribution of the goods among the individuals and a price system with the property that for each good the total amount the individuals want to purchase is equal to the total amount other individuals want to sell: demand and supply are equal.


Martin J. Osborne

Professor Emeritus of Economics at University of Toronto

Ariel Rubinstein

Emeritus in School of Economics at Tel Aviv University
Professor of Economics at New York University