BUYING SEVERAL INDIVISIBLE GOODS

Martine Quinzii, Carmen Bevia () and JosÅ A. Silva
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JosÅ A. Silva: Department of Economics, University of California Davis

No 258, Working Papers from University of California, Davis, Department of Economics

Abstract: This paper studies economies where agents exchange indivisible goods and money. Agents have potential use for all indivisible goods and the indivisible goods are differentiated. We assume that agents have quasi-linear utilities in money, have sufficient money endowments to afford any group of objects priced below their reservation values, have reservation values which are submodular and satisfy the Cardinality Condition. This Cardinality Condition requires that for each agent the marginal utility of an object only depends on the number of objects to which it is added, not on their characteristics. Under these assumptions, we show that the set of competitive equilibrium prices is a non empty lattice and that, in any equilibrium, the price of an object is between the social value of the object and its value in its second best use.

Pages: 36
Date: 2003-01-08
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Related works:
Journal Article: Buying several indivisible goods (1999)
Working Paper: Buying several indivisible goods (1997)
Working Paper: BUYING SEVERAL INDIVISIBLE GOODS
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