This book aims to develop an institutional approach to general economic
equi- librium. Thus far, institutional economics has essentially been
confined to purely verbal discourse. Here I argue the case that general
equilibrium theory forms a well rounded basis for the development of an
institutional economic the- ory. The fundamental economic trade
mechanism underlying this refocusing is that of the Edgeworthian barter
mechanism modelled through the equilibrium notion of the core of an
economy. There is an extensive literature that links the core with the
Walrasian price mechanism, which is explored in this book. Next I
develop an alternative model of explicitly nonsovereign trade in the
setting of an institutionally structured economy. In this book the core
and several of its extensions are considered to be descriptions of the
equilibrium allocations resulting from institutionalized barter
processes, thereby providing a basis of an institutionally based
economic theory. Traditionally finite economies have been assessed as
the most natural represen- tations of real life economies, in particular
of market economies. Many funda- mental insights have been developed. In
the first half of the book I summarize the most influential and
important results in the literature on finite economies regarding the
relationship of the Walrasian model of a perfectly competitive market
system and the Edgeworthian theory of individually based, pure barter
processes. I use the axiomatic method as the main methodological
framework according to which I construct my models.