Strategic Foundations of General Equilibrium: Dynamic Matching and Bargaining Games

Description

The theory of competition has held a central place in economic analysis since Adam Smith. This book, written by one of the most distinguished of contemporary economic theorists, reports on a major research program to provide strategic foundations for the theory of perfect competition. Beginning with a concise survey of how the theory of competition has evolved, Gale makes extensive and rigorous use of dynamic matching and bargaining models to provide a more complete description of how a competitive equlibrium is achieved. Whereas economists have made use of a macroscopic description of markets in which certain behavioral characteristics, such as price-taking behavior, are taken for granted, Gale uses game theory to re-evaluate this assumption, beginning with individual agents and modelling their strategic interaction. A strategic foundation for competitive equilibrium shows how such interaction leads to competitive, price-taking behavior. Essential reading for graduate courses in game theory and general equilibrium.

"Strategic Foundations of General Equilibrium takes an important step towards rectifying this shortcoming of the general equilibrium model...I found this book to be very instructive. While the subject matter is highly technical, the author made the material as accessible as possible. Gale has a fluent writing style." Eastern Economic Journal