The competitive allocation process is informationally efficient uniquely

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Abstract

This paper establishes that the competitive allocation process is the only informationally decentralized mechanism for exchange environments which (i) achieves Pareto optimal allocations; (ii) gives each consumer an allocation which is, according to his preferences, at least as good as his endowment; (iii) satisfies certain regularity conditions; and (iv) has a message space of the smallest dimension necessary to satisfy (i–iii).

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I would like to thank Professors L. Hurwicz and S. Reiter for stimulating conversations. This research was supported by NSF Grant SOC 77-07852. Any remaining errors are my own.

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