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Existence of an Equilibrium in a General Competitive Exchange Economy with Indivisible Goods and Money

Author

Listed:
  • Satoru Fujishige

    (Division of Systems Science, Graduate School of Engineering Science, Osaka University)

  • Zaifu Yang

    (Cowles Foundation for Research in Economics, Yale University
    Faculty of Business Administration, Yokohama National University)

Abstract

We introduce a general competitive exchange economy with indivisible goods and money. There are finitely many agents and finitely many indivisible goods. Each agent is initially endowed with several units of each indivisible good and certain amount of money. Money is treated as a perfectly divisible good. The agents¡¯ preferences depend on the bundle of indivisible goods and the quantity of money they consume. Preferences are quite general and are not required to be quasilinear in money. We derive a necessary and sufficient condition for the existence of a competitive equilibrium in the economy. The model and the existence results we provide here unify and extend most models and existence results that have appeared in the literature.

Suggested Citation

  • Satoru Fujishige & Zaifu Yang, 2002. "Existence of an Equilibrium in a General Competitive Exchange Economy with Indivisible Goods and Money," Annals of Economics and Finance, Society for AEF, vol. 3(1), pages 135-147, May.
    • Handle: RePEc:cuf:journl:y:2002:v:3:i:1:p:135-147
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    References listed on IDEAS

    as
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    5. Herbert Scarf, 1994. "The Allocation of Resources in the Presence of Indivisibilities," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 111-128, Fall.
    6. Herbert E. Scarf, 2008. "Neighborhood Systems for Production Sets with Indivisibilities," Palgrave Macmillan Books, in: Zaifu Yang (ed.), Herbert Scarf’s Contributions to Economics, Game Theory and Operations Research, chapter 5, pages 105-130, Palgrave Macmillan.
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    12. Yang, Zaifu, 2000. "Equilibrium in an exchange economy with multiple indivisible commodities and money," Journal of Mathematical Economics, Elsevier, vol. 33(3), pages 353-365, April.
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    1. Moshe Babaioff & Noam Nisan & Inbal Talgam-Cohen, 2021. "Competitive Equilibrium with Indivisible Goods and Generic Budgets," Mathematics of Operations Research, INFORMS, vol. 46(1), pages 382-403, February.

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    More about this item

    Keywords

    Indivisibility; Equilibrium; Fixed point; Discrete optimization;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations

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