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Competitive pricing and the core: With reference to matching

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  • Ostroy, Joseph M.

Abstract

Lloyd Shapley's contributions with respect to the core are interpreted as subdifferentiability characterizations of the pricing of individuals that is similar to the pricing of commodities in economic models of exchange with transferable utility. Differentiability of the core is interpreted as perfect substitutability with respect to the pricing of individuals. Differentiability implies, but is not implied by, equivalence of the core and Walrasian equilibria. Differentiability eliminates opportunities for strategic misrepresentation of utilities. The assignment model with transferable utility is framed in the setting of exchange economies and its individual and commodity pricing is extended to non-transferable utility.

Suggested Citation

  • Ostroy, Joseph M., 2018. "Competitive pricing and the core: With reference to matching," Games and Economic Behavior, Elsevier, vol. 108(C), pages 558-573.
    • Handle: RePEc:eee:gamebe:v:108:y:2018:i:c:p:558-573
    DOI: 10.1016/j.geb.2018.01.011
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    References listed on IDEAS

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    1. Makowski, Louis & Ostroy, Joseph M. & Segal, Uzi, 1999. "Efficient Incentive Compatible Economies Are Perfectly Competitive," Journal of Economic Theory, Elsevier, vol. 85(2), pages 169-225, April.
    2. Ostroy, Joseph M., 1981. "Differentiability as convergence to perfectly competitive equilibrium," Journal of Mathematical Economics, Elsevier, vol. 8(1), pages 59-73, March.
    3. Shapley, Lloyd S. & Shubik, Martin, 1969. "On market games," Journal of Economic Theory, Elsevier, vol. 1(1), pages 9-25, June.
    4. Makowski, Louis, 1980. "A characterization of perfectly competitive economies with production," Journal of Economic Theory, Elsevier, vol. 22(2), pages 208-221, April.
    5. Alvin E. Roth & Uriel G. Rothblum & John H. Vande Vate, 1993. "Stable Matchings, Optimal Assignments, and Linear Programming," Mathematics of Operations Research, INFORMS, vol. 18(4), pages 803-828, November.
    6. Ostroy, Joseph M., 1980. "The no-surplus condition as a characterization of perfectly competitive equilibrium," Journal of Economic Theory, Elsevier, vol. 22(2), pages 183-207, April.
    7. Gretsky, Neil E. & Ostroy, Joseph M. & Zame, William R., 1999. "Perfect Competition in the Continuous Assignment Model," Journal of Economic Theory, Elsevier, vol. 88(1), pages 60-118, September.
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    Cited by:

    1. Arthur Dolgopolov & Daniel Houser & Cesar Martinelli & Thomas Stratmann, 2019. "Assignment Markets: Theory and Experiments," Working Papers 1075, George Mason University, Interdisciplinary Center for Economic Science.

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    More about this item

    Keywords

    Subdifferential; Core; Market game; Assignment model; Walrasian equilibrium; Perfect substitutability;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies

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