Noncooperative Exchange With a Continuum of Traders

Price formation and trade in a large exchange economy is modeled as a non-atomic noncooperative game in two contrasting ways: (1) with fiat money, with borrowing and bankruptcy permitted, and (2) with a commodity money and no borrowing. Results relating the noncooperative (Nash) equilibrium with the competitive (Walrus) equilibrium are obtained for each model, and some special cases are considered. The basic problem of measurability of the strategy selection when there is a continuum of players is also considered, and way of resolving it is proposed.