Characterizing the top trading cycles rule for housing markets with lexicographic preferences when externalities are limited

Bettina Klaus

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

Abstract: We consider a variation of the housing market model a la Shapley and Scarf (1974) where agents care both about their own consumption via demand preferences and about the agent who receives their endowment via supply preferences (see Klaus and Meo, 2021). Then, if preferences are either all demand lexicographic or all supply lexicographic, we characterize the corresponding top trading cycles rule by individual rationality, Pareto optimality, and strategy-proofness. Since on the lexicographic preference domains the strong core can be multi-valued, our result sheds light on the fact that the properties that also characterized the strong core rule for Shapley-Scarf housing markets (Ma, 1994) characterize the top trading cycles rule and not the strong core rule (or correspondence).

Keywords: Core; characterization; externalities; housing markets; top trading cycles rule (search for similar items in EconPapers)
JEL-codes: C70 C71 C78 D62 D64 (search for similar items in EconPapers)
Pages: 14 pp.
Date: 2021-02
New Economics Papers: this item is included in nep-des, nep-gth and nep-ore
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:lau:crdeep:21.04

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