Sure it can. Actual competitive markets are made of competing firms, and firms can't (in general) optimise. 1. Holmstrom's theorem tells us that no payment sy

Sure it can. Actual competitive markets are made of competing firms, and firms can't (in general) optimise. 1. Holmstrom's theorem tells us that no payment system for a team of agents can have a budget in balance, be in Nash equilibrium, and be Pareto efficient. 2. Since firms are definitionally teams of people, and since you don't get a choice whether the budget balancing or the workers optimise, this means that firms must sacrifice Pareto efficiency. 3. If firms can't always seek out the Pareto frontier, then a competitive market composed of firms will not satisfy the conditions for Walras' theorem to hold, and so competitive markets can't necessarily reach equilibrium.