IDEAS home Printed from https://ideas.repec.org/p/ces/ceswps/_4414.html
   My bibliography  Save this paper

Household Formation and Markets

Author

Listed:
  • Hans Gersbach
  • Hans Haller
  • Hideo Konishi

Abstract

We consider competitive markets for multiple commodities with endogenous formation of one- or two-person households. Within each two-person household, externalities from the partner’s commodity consumption and unpriced actions are allowed. Each individual has two types of traits: observable characteristics and unobservable taste characteristics. Each individual gets utility from his/her own private consumption, from discrete actions such as job-choice, from the partner’s observable characteristics such as appearance and hobbies, from some of the partner’s consumption vectors, and from the partner’s action choices. We investigate competitive market outcomes with an endogenous household structure in which no individual and no man/woman-pair can deviate profitably. We find a set of sufficient conditions under which a stable matching equilibrium exists. We further establish the first welfare theorem for this economy.

Suggested Citation

  • Hans Gersbach & Hans Haller & Hideo Konishi, 2013. "Household Formation and Markets," CESifo Working Paper Series 4414, CESifo.
    • Handle: RePEc:ces:ceswps:_4414
    as

    Download full text from publisher

    File URL: https://www.cesifo.org/DocDL/cesifo1_wp4414.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Andrew Postlewaite, 1979. "Manipulation via Endowments," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 46(2), pages 255-262.
    2. Georg Nöldeke & Larry Samuelson, 2015. "Investment and Competitive Matching," Econometrica, Econometric Society, vol. 83(3), pages 835-896, May.
    3. Ray, Debraj & Vohra, Rajiv, 1997. "Equilibrium Binding Agreements," Journal of Economic Theory, Elsevier, vol. 73(1), pages 30-78, March.
    4. Crawford, Vincent P & Knoer, Elsie Marie, 1981. "Job Matching with Heterogeneous Firms and Workers," Econometrica, Econometric Society, vol. 49(2), pages 437-450, March.
    5. Kaneko, Mamoru & Wooders, Myrna Holtz, 1986. "The core of a game with a continuum of players and finite coalitions: The model and some results," Mathematical Social Sciences, Elsevier, vol. 12(2), pages 105-137, October.
    6. William R. Zame, 2007. "Incentives, Contracts, and Markets: A General Equilibrium Theory of Firms," Econometrica, Econometric Society, vol. 75(5), pages 1453-1500, September.
    7. Ellickson, Bryan & Grodal, Birgit & Scotchmer, Suzanne & Zame, William R., 2001. "Clubs and the Market: Large Finite Economies," Journal of Economic Theory, Elsevier, vol. 101(1), pages 40-77, November.
    8. Bryan Ellickson & Birgit Grodal & Suzanne Scotchmer & William R. Zame, 1999. "Clubs and the Market," Econometrica, Econometric Society, vol. 67(5), pages 1185-1218, September.
    9. Bourguignon, Francois & Chiappori, Pierre-Andre, 1992. "Collective models of household behavior : An introduction," European Economic Review, Elsevier, vol. 36(2-3), pages 355-364, April.
    10. Safra, Zvi, 1985. "Existence of equilibrium for walrasian endowment games," Journal of Economic Theory, Elsevier, vol. 37(2), pages 366-378, December.
    11. Konishi, Hideo, 1996. "Voting with Ballots and Feet: Existence of Equilibrium in a Local Public Good Economy," Journal of Economic Theory, Elsevier, vol. 68(2), pages 480-509, February.
    12. Wooders, Myrna Holtz, 1988. "Stability of jurisdiction structures in economies with local public goods," Mathematical Social Sciences, Elsevier, vol. 15(1), pages 29-49, February.
    13. Ellickson, Bryan, 1979. "Competitive equilibrium with local public goods," Journal of Economic Theory, Elsevier, vol. 21(1), pages 46-61, August.
    14. Pines,David & Sadka,Efraim & Zilcha,Itzhak (ed.), 1998. "Topics in Public Economics," Cambridge Books, Cambridge University Press, number 9780521561365, January.
    15. Allouch, Nizar & Conley, John P. & Wooders, Myrna, 2009. "Anonymous price taking equilibrium in Tiebout economies with a continuum of agents: Existence and characterization," Journal of Mathematical Economics, Elsevier, vol. 45(9-10), pages 492-510, September.
    16. Joseph Greenberg, 1979. "Existence and Optimality of Equilibrium in Labour-managed Economies," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 46(3), pages 419-433.
    17. Shafer, Wayne & Sonnenschein, Hugo, 1975. "Equilibrium in abstract economies without ordered preferences," Journal of Mathematical Economics, Elsevier, vol. 2(3), pages 345-348, December.
    18. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
    19. Gilles, Robert P. & Scotchmer, Suzanne, 1997. "Decentralization in Replicated Club Economies with Multiple Private Goods," Journal of Economic Theory, Elsevier, vol. 72(2), pages 363-387, February.
    20. Apps,Patricia & Rees,Ray, 2009. "Public Economics and the Household," Cambridge Books, Cambridge University Press, number 9780521716284, January.
    21. Gersbach, Hans & Haller, Hans, 2011. "Groups, collective decisions and markets," Journal of Economic Theory, Elsevier, vol. 146(1), pages 275-299, January.
    22. Gersbach, Hans & Haller, Hans, 2010. "Club theory and household formation," Journal of Mathematical Economics, Elsevier, vol. 46(5), pages 715-724, September.
    23. Mas-Colell, Andreu, 1977. "Indivisible commodities and general equilibrium theory," Journal of Economic Theory, Elsevier, vol. 16(2), pages 443-456, December.
    24. Conley, John P. & Wooders, Myrna H., 1997. "Equivalence of the Core and Competitive Equilibrium in a Tiebout Economy with Crowding Types," Journal of Urban Economics, Elsevier, vol. 41(3), pages 421-440, May.
    25. Alkan, Ahmet & Gale, David, 1990. "The core of the matching game," Games and Economic Behavior, Elsevier, vol. 2(3), pages 203-212, September.
    26. Konishi, Hideo, 2013. "Entrepreneurial land developers: Joint production, local externalities, and mixed housing developments," Journal of Urban Economics, Elsevier, vol. 75(C), pages 68-79.
    27. Hideo Konishi, 2010. "Efficient Mixed Clubs: Nonlinear‐Pricing Equilibria With Entrepreneurial Managers," The Japanese Economic Review, Japanese Economic Association, vol. 61(1), pages 35-63, March.
    28. Orhan Ayg?n & Tayfun S?nmez, 2013. "Matching with Contracts: Comment," American Economic Review, American Economic Association, vol. 103(5), pages 2050-2051, August.
    29. John William Hatfield & Paul R. Milgrom, 2005. "Matching with Contracts," American Economic Review, American Economic Association, vol. 95(4), pages 913-935, September.
    30. M. R. Rosenzweig & Stark, O. (ed.), 1997. "Handbook of Population and Family Economics," Handbook of Population and Family Economics, Elsevier, edition 1, volume 1, number 1.
    31. Becker, Gary S, 1973. "A Theory of Marriage: Part I," Journal of Political Economy, University of Chicago Press, vol. 81(4), pages 813-846, July-Aug..
    32. Haller, Hans, 1988. "Manipulation of endowments in replica economies : An example," European Economic Review, Elsevier, vol. 32(6), pages 1375-1383, July.
    33. Cole, Harold L. & Prescott, Edward C., 1997. "Valuation Equilibrium with Clubs," Journal of Economic Theory, Elsevier, vol. 74(1), pages 19-39, May.
    34. Dreze, J H & Greenberg, J, 1980. "Hedonic Coalitions: Optimality and Stability," Econometrica, Econometric Society, vol. 48(4), pages 987-1003, May.
    35. Hans Gersbach & Hans Haller, 2001. "Collective Decisions and Competitive Markets," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 68(2), pages 347-368.
    36. J. A. Mirrlees, 1971. "An Exploration in the Theory of Optimum Income Taxation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 38(2), pages 175-208.
    37. Wooders, Myrna Holtz, 1989. "A Tiebout theorem," Mathematical Social Sciences, Elsevier, vol. 18(1), pages 33-55, August.
    38. Kapteyn, Arie & Kooreman, Peter, 1992. "Household labor supply: What kind of data can tell us how many decision makers there are?," European Economic Review, Elsevier, vol. 36(2-3), pages 365-371, April.
    39. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, vol. 56(1), pages 63-90, January.
    40. Michele Gori, 2010. "Endogenous household formation and inefficiency in a general equilibrium model," Working Papers - Mathematical Economics 2010-09, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa, revised Oct 2010.
    41. Chiappori, Pierre-Andre, 1992. "Collective Labor Supply and Welfare," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 437-467, June.
    42. Blundell,R. W. & Preston,Ian & Walker,Ian (ed.), 1994. "The Measurement of Household Welfare," Cambridge Books, Cambridge University Press, number 9780521451956, January.
    43. 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.
    44. Hideo Konishi, 2011. "Entrepreneurial Land Developers: Joint Production, Local Externalities, and Mixed Housing," Boston College Working Papers in Economics 777, Boston College Department of Economics, revised 06 Apr 2013.
    45. Wooders, Myrna, 1978. "Equilibria, the core, and jurisdiction structures in economies with a local public good," Journal of Economic Theory, Elsevier, vol. 18(2), pages 328-348, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gersbach, Hans & Haller, Hans, 2019. "Households, markets and public choice," Mathematical Social Sciences, Elsevier, vol. 100(C), pages 16-28.
    2. José Luis Contreras & Juan Pablo Torres-Martínez, 2021. "The roommate problem with externalities," International Journal of Game Theory, Springer;Game Theory Society, vol. 50(1), pages 149-165, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gersbach, Hans & Haller, Hans, 2011. "Groups, collective decisions and markets," Journal of Economic Theory, Elsevier, vol. 146(1), pages 275-299, January.
    2. Gersbach, Hans & Haller, Hans, 2010. "Club theory and household formation," Journal of Mathematical Economics, Elsevier, vol. 46(5), pages 715-724, September.
    3. Konishi, Hideo, 2013. "Entrepreneurial land developers: Joint production, local externalities, and mixed housing developments," Journal of Urban Economics, Elsevier, vol. 75(C), pages 68-79.
    4. Gersbach, Hans & Haller, Hans, 2006. "Clubs and Households," CEPR Discussion Papers 5687, C.E.P.R. Discussion Papers.
    5. Hans Gersbach & Hans Haller, 2011. "Bargaining cum voice," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 36(2), pages 199-225, February.
    6. Hideo Konishi, 2010. "Efficient Mixed Clubs: Nonlinear‐Pricing Equilibria With Entrepreneurial Managers," The Japanese Economic Review, Japanese Economic Association, vol. 61(1), pages 35-63, March.
    7. Hans Gersbach & Hans Haller, 2018. "Power at general equilibrium," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 50(3), pages 425-455, March.
    8. Allouch, Nizar & Conley, John P. & Wooders, Myrna, 2009. "Anonymous price taking equilibrium in Tiebout economies with a continuum of agents: Existence and characterization," Journal of Mathematical Economics, Elsevier, vol. 45(9-10), pages 492-510, September.
    9. Jaime Luque, 2014. "Wages, local amenities and the rise of the multi-skilled city," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 52(2), pages 457-467, March.
    10. Philippe Jehiel & Laurent Lamy, 2018. "A Mechanism Design Approach to the Tiebout Hypothesis," Journal of Political Economy, University of Chicago Press, vol. 126(2), pages 735-760.
    11. Wooders, Myrna, 2008. "Market games and clubs," MPRA Paper 33968, University Library of Munich, Germany, revised Dec 2010.
    12. Hans Gersbach & Hans Haller, 2002. "Competitive Markets, Collective Decisions and Group Formation," Discussion Papers 02-11, University of Copenhagen. Department of Economics.
    13. Hideo Konishi, 2011. "Entrepreneurial Land Developers: Joint Production, Local Externalities, and Mixed Housing," Boston College Working Papers in Economics 777, Boston College Department of Economics, revised 06 Apr 2013.
    14. Luque, Jaime, 2013. "Heterogeneous Tiebout communities with private production and anonymous crowding," Regional Science and Urban Economics, Elsevier, vol. 43(1), pages 117-123.
    15. Ellickson, Bryan & Grodal, Birgit & Scotchmer, Suzanne & Zane, William R., 1997. "clubs and the Market: Large Finite Economies," Department of Economics, Working Paper Series qt10k1b44j, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    16. John P. Conley & Myrna Holtz Wooders, 1998. "The Tiebout Hypothesis: On the Existence of Pareto Efficient Competitive Equilibrium," Working Papers mwooders-98-06, University of Toronto, Department of Economics.
    17. Ellickson, Bryan & Grodal, Birgit & Scotchmer, Suzanne & Zame, William R., 2001. "Clubs and the Market: Large Finite Economies," Journal of Economic Theory, Elsevier, vol. 101(1), pages 40-77, November.
    18. Konishi, Hideo, 2008. "Tiebout's tale in spatial economies: Entrepreneurship, self-selection, and efficiency," Regional Science and Urban Economics, Elsevier, vol. 38(5), pages 461-477, September.
    19. Allouch, Nizar & Wooders, Myrna, 2008. "Price taking equilibrium in economies with multiple memberships in clubs and unbounded club sizes," Journal of Economic Theory, Elsevier, vol. 140(1), pages 246-278, May.
    20. Marcus Berliant & John H. Y. Edwards, 2004. "Efficient Allocations in Club Economies," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 6(1), pages 43-63, February.

    More about this item

    Keywords

    endogenous household formation; consumption externalities; stable matching equilibrium; efficiency;
    All these keywords.

    JEL classification:

    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_4414. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Klaus Wohlrabe (email available below). General contact details of provider: https://edirc.repec.org/data/cesifde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.