What is a Walrasian Market?

In a Walrasian market, buy and sell orders are grouped together and then executed at specific times, rather than executed one by one continuously.

How Does a Walrasian Market Work?

Let's assume that the following buy orders for Company XYZ stock are received:

Buy 1,000 shares @ $4.25
Buy 500 shares @ $4.00
Buy 700 shares @ $4.50
Buy 500 shares @ $4.25

Sell 1,000 shares @ $4.25
Sell 500 shares @ $4.00
Sell 700 shares @ $4.50
Sell 500 shares @ $4.25

In a Walrasian market, the buy orders are grouped together and executed at a price and time that will clear most of those orders. In this case, that price might be $4.25. Note that even though some of the parties were willing to buy or sell for $4.00, the price that clears most of the transactions is $4.25, and that is the price at which the exchange's market analyst executes these trades in a call market.

A Walrasian market is different from an auction market, whereby buyers and sellers trade continuously.

Why Does a Walrasian Market Matter?

Walrasian markets are helpful in illiquid markets or markets where there are few buyers, sellers, and shares to trade. As such, the buyers and sellers in a Walrasian market do not have the final say on what the final price is in their trades. This differs from an auction market, whereby the final price is more directly determined by market forces.

Ask an Expert

All of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Walrasian Market.

Be the first to ask a question

If you have a question about Walrasian Market, then please ask Paul Tracy.

Paul Tracy
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.

Verified Content You Can Trust
   Certified Experts   5,000+ Research Pages   5+ Million Users