Equilibrium in quality markets, beyond the transferable case

G. Carlier () and I. Ekeland ()
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G. Carlier: Université Paris-Dauphine, PSL Research University
I. Ekeland: Université Paris-Dauphine, PSL Research University

Economic Theory, 2019, vol. 67, issue 2, No 4, 379-391

Abstract: Abstract We consider the market for an indivisible quality good, in the tradition of standard hedonic equilibrium theory but replacing the commonly used quasi-linear assumption on consumers’ preferences by a more realistic nonlinear budget constraint. Taking advantage of quasi-linearity on the producer’s side, we prove that an optimal transport-like argument can still be used to derive existence of equilibria. We also discuss some simple one-dimensional examples.

Keywords: Quality markets; Equilibrium; Optimal transport; Nontransferable models (search for similar items in EconPapers)
JEL-codes: C62 C78 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1007/s00199-018-1118-8

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