On Nash Implementation of the Walrasian or Lindahl Correspondence in the Two-Agent Economy

Abstract

Various possibility and impossibility theorems are obtained concerning Nash implementation of the Walrasian or Lindahl correspondence in two-agent economies. The result is drastically different from the case with more than two agents. There is neither a continuous and balanced, nor a smooth and weakly balanced mechanism which implements either of these two correspondences. For both the Walrasian and Lindahl cases, however, there are mechanisms which implement the correspondence with properties which are either continuous and weakly balanced, or smooth but not weakly balanced.