Implications
There are two main implications of the limit theorem. The first is that the end result of trade between small groups of people is indeterminate and is determined by what were to Edgeworth non-economic factors. The second is that the equivalent of a price-taking equilibrium can arise from competition between very large groups of traders through the recontracting process. This equilibrium point cannot be moved by groups of traders acting in collusion to try to obtain the gains from trade for themselves as other traders will always have an incentive to leave the group out in the cold. This provides a justification for assuming price-taking behaviour in certain situations, even though explanations of how a price-taking situation can arise (such as tatonnement) are clearly implausible.
Read more about this topic: Edgeworth's Limit Theorem
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