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A classification approach to Walrasian equilibrium with substitutability

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  • Yang, Yi-You

Abstract

In exchange economies with indivisible objects, the substitutability of agents' preferences is essential for the guaranteed existence of Walrasian equilibrium. In this paper, we analyze the ranges of variation for agents' preferences that will guarantee the existence of equilibrium when some agents' preferences are known to satisfy the substitutability condition. Our approach is based on a classification result that partitions the set of economies into disjoint weak similarity classes such that whenever a weak similarity class contains an economy with an equilibrium, each economy in this class also has an equilibrium. The links among economies in the same weak similarity class are established with the notion of monotonization and tax systems.

Suggested Citation

  • Yang, Yi-You, 2013. "A classification approach to Walrasian equilibrium with substitutability," MPRA Paper 47945, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:47945
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    References listed on IDEAS

    as
    1. Jos A.M. Potters & Anita van Gellekom & Hans Reijnierse, 2002. "Verifying gross substitutability," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 20(4), pages 767-776.
    2. Gul, Faruk & Stacchetti, Ennio, 1999. "Walrasian Equilibrium with Gross Substitutes," Journal of Economic Theory, Elsevier, vol. 87(1), pages 95-124, July.
    3. Ning Sun & Zaifu Yang, 2006. "Equilibria and Indivisibilities: Gross Substitutes and Complements," Econometrica, Econometric Society, vol. 74(5), pages 1385-1402, September.
    4. Hatfield, John William & Kojima, Fuhito, 2010. "Substitutes and stability for matching with contracts," Journal of Economic Theory, Elsevier, vol. 145(5), pages 1704-1723, September.
    5. 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.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Equilibrium; indivisibility; substitutability; free disposal; tax system.;
    All these keywords.

    JEL classification:

    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies

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