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Indivisible goods, equilibrium and convex economies

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  • Méndez-Naya, Luciano
  • Méndez-Naya, José

Abstract

We study the existence of competitive equilibria in economies with indivisible goods. The first result provides a novel sufficient condition for an economy with indivisible goods to have competitive equilibrium. This condition states that the cooperative game associated with the economy has a non-empty core. Crucially, this sufficient condition is also necessary when the economy is convex. This characterization implies that every two-agent convex economy has at least one competitive equilibrium.

Suggested Citation

  • Méndez-Naya, Luciano & Méndez-Naya, José, 2024. "Indivisible goods, equilibrium and convex economies," Journal of Economic Theory, Elsevier, vol. 222(C).
    • Handle: RePEc:eee:jetheo:v:222:y:2024:i:c:s0022053124001364
    DOI: 10.1016/j.jet.2024.105930
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    References listed on IDEAS

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    1. Ning Sun & Zaifu Yang, 2006. "Equilibria and Indivisibilities: Gross Substitutes and Complements," Econometrica, Econometric Society, vol. 74(5), pages 1385-1402, September.
    2. Ma, Jinpeng, 1998. "Competitive Equilibrium with Indivisibilities," Journal of Economic Theory, Elsevier, vol. 82(2), pages 458-468, October.
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    4. Kelso, Alexander S, Jr & Crawford, Vincent P, 1982. "Job Matching, Coalition Formation, and Gross Substitutes," Econometrica, Econometric Society, vol. 50(6), pages 1483-1504, November.
    5. Lloyd S. Shapley, 1967. "On balanced sets and cores," Naval Research Logistics Quarterly, John Wiley & Sons, vol. 14(4), pages 453-460.
    6. Satoru Fujishige & Zaifu Yang, 2003. "A Note on Kelso and Crawford's Gross Substitutes Condition," Mathematics of Operations Research, INFORMS, vol. 28(3), pages 463-469, August.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Competitive equilibrium; Indivisibles; Convexity; Cooperative games;
    All these keywords.

    JEL classification:

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

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