Exchange economy

Exchange economy is technical term used in microeconomics research to describe interaction between several agents. Each agent brings his/her own endowment, and they can exchange products among them based on a price system. Two types of exchange economy are studied:

• In a pure exchange economy, all agents are consumers; there is no production and all agents can do is exchange their initial endowments.
• In contrast, in an exchange economy with production, some or all agents are firms that may also produce new goods.

A major interesting question regarding an exchange economy is if and when the economy attains a competitive equilibrium.

See also

• Market economy
• Barter