Welfare properties and core for a competitive equilibrium without divisible

Jorge Rivera and Michael Florig

Working Papers from University of Chile, Department of Economics

Abstract: We study welfare and core equivalence for a competitive equilibrium defined on an economy where all commodities are indivisible at the individual level, but perfectly divisible at the aggregate level. In our model is assumed that thereexists a continuum parameter, which can be interpreted as fiat money and does not participate in the preferences of individuals and could be used to facilitate exchange. Given the existence of equilibria with a strictly positive price of fiat money, we establish a core equivalence result, and First and Second Welfare Theorems.

Keywords: indivisible goods; competitive equilibrium; Pareto optimum; core. (search for similar items in EconPapers)
JEL-codes: D50 D60 (search for similar items in EconPapers)
Date: 2005-01
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