Verifying gross substitutability

Jos A.M. Potters (potters@sci.kun.nl), Anita van Gellekom (potters@sci.kun.nl) and Hans Reijnierse (hans.reijnierse@gmail.com)
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Jos A.M. Potters: Department of Mathematics, Nijmegen University, P.O. Box 9010,6500 GL Nijmegen,THE NETHERLANDS
Anita van Gellekom: Department of Mathematics, Nijmegen University, P.O. Box 9010,6500 GL Nijmegen,THE NETHERLANDS

Economic Theory, 2002, vol. 20, issue 4, 767-776

Abstract: In labor market models as well as in exchange economies with indivisible goods gross substitutability is used as a property to guarantee the existence of competitive equilibria. This paper develops an easy way to check gross substitutability for utility functions concerning a finite set of indivisible goods (or employees) and money. Concavity is one of the conditions that has to be satisfied. Only one other, but similar, type of relation must be checked to guarantee gross substitutability.

Keywords: Gross substitutability; Competitive equilibrium; Labor market; Exchange economies with indivisible goods. (search for similar items in EconPapers)
JEL-codes: C62 C63 J40 (search for similar items in EconPapers)
Date: 2002-03-21
Note: Received: 21 August 2000; revised version: 28 November 2001
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Citations: View citations in EconPapers (18)

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