Market design and the stability of general equilibrium

We also introduce a novel market mechanism where participants submit demand schedules and prices are computed using Smale's global Newtonian dynamic (Smale, 1976b). If the submitted schedules are competitive - sets of quantities that maximize utility taking prices as given - the resulting outcome is the unique competitive equilibrium of Scarf's economy. In experiments using the schedule market, prices converge quickly to the competitive equilibrium. Besides stabilizing prices, the schedule market is more efficient and results in highly egalitarian outcomes.