to subsidize their trading. Similarly, it is unreasonable to imagine that the parties will
actually rid themselves of excess funds (“burn money”). Should the mechanism call for
them to rid themselves of excess funds, the parties will presumably renegotiate their
agreement and divide the excess funds among themselves. In essence, one can think of
burning money as violating a collective ex postrationality constraint.
That noted, one can, however, imagine a few trading relations in which unbalanced
mechanisms could be reasonable. If buyer and seller are different divisions of the same
firm, then ...
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