A Dynamic Recontracting Process for Multiple-Type Housing Markets

Bettina Klaus (), Olivier Bochet () and Markus Walzl

Cahiers de Recherches Economiques du Département d'économie from Université de Lausanne, Faculté des HEC, Département d’économie

Abstract: We consider multiple-type housing markets. To capture the dynamic aspect of trade in such markets, we study a dynamic recontracting process similar to the one introduced by Serrano and Volij (2008). First, we analyze the set of recurrent classes of this process as a (non-empty) solution concept. We show that each core allocation always constitutes a singleton recurrent class and provide examples of non-singleton recurrent classes consisting of blocking-cycles of individually rational allocations. For multiple-type housing markets stochastic stability never serves as a selection device among recurrent classes. Next, we propose a method to compute the limit invariant distribution of the dynamic recontracting process. Furthermore, we discuss how the limit invariant distribution is inuenced by the relative coalitional stability and accessibility of the different stochastically stable allocations. We illustrate our finndings with several examples. In particular, we demonstrate that some core allocations are less likely to be final allocations of the dynamic process than cycles composed of non-core allocations.

Keywords: core; indivisible goods; limit invariant distribution; stochastic stability (search for similar items in EconPapers)
JEL-codes: D63 D70 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2010-02
New Economics Papers: this item is included in nep-ure
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Citations: View citations in EconPapers (2)

Published in Journal of Mathematical Economics, 47(1), January 2011, pp. 84-98

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Related works:
Journal Article: A dynamic recontracting process for multiple-type housing markets (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:lau:crdeep:10.02

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