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Verifying gross substitutability


Author Info

  • Jos A.M. Potters

    (Department of Mathematics, Nijmegen University, P.O. Box 9010,6500 GL Nijmegen,THE NETHERLANDS)

  • Anita van Gellekom

    (Department of Mathematics, Nijmegen University, P.O. Box 9010,6500 GL Nijmegen,THE NETHERLANDS)

  • Hans Reijnierse

    (Department of Econometrics and CentER, Tilburg University, P.O. Box 90153, 5000 LE Tilburg, THE NETHERLANDS .)


In labor market models as well as in exchange economies with indivisible goods gross substitutability is used as a property to guarantee the existence of competitive equilibria. This paper develops an easy way to check gross substitutability for utility functions concerning a finite set of indivisible goods (or employees) and money. Concavity is one of the conditions that has to be satisfied. Only one other, but similar, type of relation must be checked to guarantee gross substitutability.

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Bibliographic Info

Article provided by Springer in its journal Economic Theory.

Volume (Year): 20 (2002)
Issue (Month): 4 ()
Pages: 767-776

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Handle: RePEc:spr:joecth:v:20:y:2002:i:4:p:767-776

Note: Received: 21 August 2000; revised version: 28 November 2001
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Keywords: Gross substitutability; Competitive equilibrium; Labor market; Exchange economies with indivisible goods.;

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Cited by:
  1. Paul Milgrom, 2003. "Matching with Contracts," Working Papers 03003, Stanford University, Department of Economics.
  2. Hatfield, John William & Immorlica, Nicole & Kominers, Scott Duke, 2012. "Testing substitutability," Games and Economic Behavior, Elsevier, vol. 75(2), pages 639-645.
  3. Goossens, D.R. & Müller, R. & Spieksma, F.C.R., 2007. "Matrix bids in combinatorial auctions: expressiveness and micro-economic properties," Research Memorandum 016, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  4. Yang, Yi-You, 2013. "A classification approach to Walrasian equilibrium with substitutability," MPRA Paper 47945, University Library of Munich, Germany.


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