Substitute Valuations, Auctions and Equilibrium with Discrete Goods
For economies in which goods are available in several (discrete) units, this paper identifies two notions of substitutes. The weaker notion guarantees monotonicity of tatonnement processses and convergence of clock auctions to a pseudo-equilibrium, but only the stronger notion, which treats each unit traded as a distinct good with its own price, guarantees that every pseudo-equilibrium is a Walrasian equilibrium, the Vickrey outcome is in the core, and the law of aggregate demand is satisfied. The paper provides several characterizations and properties of weak and strong substitutes.
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- Gul, Faruk & Stacchetti, Ennio, 2000. "The English Auction with Differentiated Commodities," Journal of Economic Theory, Elsevier, vol. 92(1), pages 66-95, May.
- Gul, Faruk & Stacchetti, Ennio, 1999. "Walrasian Equilibrium with Gross Substitutes," Journal of Economic Theory, Elsevier, vol. 87(1), pages 95-124, July.
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- Paul Milgrom, 2000. "Putting Auction Theory to Work: The Simultaneous Ascending Auction," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 245-272, April.
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03003, Stanford University, Department of Economics.
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02004, Stanford University, Department of Economics.
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