The fiscal limits of efficient trade
Sustaining efficient trade under private information requires external subsidies. Although a designer cannot avoid deficits on average, they can control exposure. We characterize efficient and truthful mechanisms that minimize the worst-case deficit in markets with many buyers and sellers, under interim participation. This problem is dual to maximizing expected trade surplus under correlation ambiguity, with constraints on submarkets with one agent removed. In bilateral trade, the best deficit ceiling is the competitive surplus in a benchmark continuum market, achieved by a "competitive pivot mechanism". In larger markets, optimal mechanisms are characterized in terms of worst-case residual welfare contributions, but solutions exhibit a complex combinatorial structure. We obtain explicit guarantees under natural participation charge restrictions and establish how the best deficit excess decays as market thickens. Our duality characterization is general and extends to many mechanism design environments (public goods, partnership dissolution), and alternative participation constraints.