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The Equilibrium Existence Duality

Author

Listed:
  • Elizabeth Baldwin
  • Ravi Jagadeesan
  • Paul Klemperer
  • Alexander Teytelboym

Abstract

We show that with indivisible goods, the existence of competitive equilibrium fundamentally depends on agents’ substitution effects, not their income effects. Our equilibrium existence duality allows us to transport results on the existence of competitive equilibrium from settings with transferable utility to settings with income effects. One consequence is that net substitutability—which is a strictly weaker condition than gross substitutability—is sufficient for the existence of competitive equilibrium. Further applications give new existence results beyond the case of (net) substitutes. Our results have implications for auction design.

Suggested Citation

  • Elizabeth Baldwin & Ravi Jagadeesan & Paul Klemperer & Alexander Teytelboym, 2023. "The Equilibrium Existence Duality," Journal of Political Economy, University of Chicago Press, vol. 131(6), pages 1440-1476.
    • Handle: RePEc:ucp:jpolec:doi:10.1086/722935
    DOI: 10.1086/722935
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    Cited by:

    1. Masahiro KAWASAKI & Ryosuke SAKAI & Tomoya KAZUMURA, 2023. "Sequential dictatorship rules in multi-unit objectassignment problems with money," Discussion papers e-23-007, Graduate School of Economics , Kyoto University.
    2. Masahiro KAWASAKI & Ryosuke SAKAI & Tomoya KAZUMURA, 2024. "Sequential dictatorship rules in multi-unit object assignment problems with money," Discussion papers e-23-007-v2, Graduate School of Economics , Kyoto University.
    3. Afacan, Mustafa Oğuz & Hu, Gaoji & Li, Jiangtao, 2024. "Housing markets since Shapley and Scarf," Journal of Mathematical Economics, Elsevier, vol. 111(C).

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