Stable allocations in discrete exchange economies

Federico Echenique, Sumit Goel and SangMok Lee

Journal of Economic Theory, 2024, vol. 222, issue C

Abstract: We study stable allocations in an exchange economy with indivisible goods. The problem is well-known to be challenging, and rich enough to express fundamentally unstable economies, such as the roommate problem. Our approach stems from generalizing the original study of an exchange economy with unit demand and unit endowments, the housing model. Our first approach uses Scarf's theorem, and proposes sufficient conditions under which a “convexify then round” technique ensures that the core is nonempty. The upshot is that a core allocation exists in categorical economies with dichotomous preferences. Our second approach uses a generalization of the TTC: it works under general conditions, and finds a solution that is a version of the stable set.

Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:222:y:2024:i:c:s0022053124001273

DOI: 10.1016/j.jet.2024.105921

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