Efficient incentive compatible economies are perfectly competitive

Efficient, anonymous, and continuous mechanisms for exchange environments w ith a finite number of individuals are dominant strategy incentive compatib le if and only if they are perfectly competitive, i.e., each individual is unable to influence prices or anyone's wealth. Equivalently, in such a mech anism each individual creates no externalities for others by her announceme nt of a type. The characterization applies whether preferences are ordinal or quasilinear, and it also applies to continuum economies. Perfectly compe titive mechanisms are non-generic (although non-vacuous) in finite economie s and are generic (but non-universal) in continuum economies. We use these results to provide bridges to related work. Journal of Economic Literature Classification Numbers: C72, D51, D62. (C) 1999 Academic Press.