Core equivalence and welfare properties without divisible goods

Michael Florig and Jorge Rivera

Journal of Mathematical Economics, 2010, vol. 46, issue 4, 467-474

Abstract: We study an economy where all goods entering preferences or production processes are indivisible. Fiat money not entering consumers' preferences is an additional perfectly divisible parameter. We establish a First and Second Welfare Theorem and a core equivalence result for the rationing equilibrium concept introduced in Florig and Rivera (2005a). The rationing equilibrium can be considered as a natural extension of the Walrasian notion when all goods are indivisible at the individual level but perfectly divisible at the level of the entire economy. As a Walras equilibrium with money is a special case of a rationing equilibrium, our results also hold for Walras equilibria with money.

Keywords: Indivisible; goods; Competitive; equilibrium; Pareto; optimum; Core (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (8)

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