Mechanism for attaining walrasian equilibrium

We have shown above that under certain conditions, an equilibrium price, can be found, for which demand is equal to supply. However, the underlying process  through which  the initial price  P  moves  to  P* is seen through various mechanisms.

1)  Tatonnemant Process: A fictitious auctioneer  is put in charge with calling out  a price vector  and  agents respond  by  providing information about their demands an  supplies. Only when the  auctioneer calls  that price vector for which  the quantity demanded is identical to that which  is supplied, trading is permitted to take place.

2) Provisional Contract: There could be  recontracting  in which  buyers and  sellers would  enter  into provisional contract before  actual exchange goods takes  place. Unless the agreed  price vector  is  equilibrium one, provisional contracts remain unimplemented.

3)  Central Planning:  A  central authority  is  established to  whom  the consumers report their excess demands at all prices. You  have to remember the planning processes of socialist economies  to  appreciate the  notion of arriving at  the  equilibrium price. This was highlighted  by  Oskar Lange and Abba  P.  Lerner when they said  that a socialist system can operate as efficiently as a capitalist one.