Walrasian equilibrium with gross substitutes

Faruk Gul, Ennio Stacchetti

    Research output: Contribution to journalArticle

    Abstract

    We study economies with indivisibilities that satisfy the gross substitutes (GS) condition. The simplest example of GS preferences are unit demand preferences. We prove that the set of GS preferences is the largest set containing unit demand preferences for which the existence of Walrasian equilibrium is guaranteed. We show that if a GS economy is replicated sufficiently many times, the equilibrium payment of any agent in the Vickrey-Clarke-Groves mechanism is equal to the value of the allocation he receives at the smallest Walrasian prices. The model extended to include production. Journal of Economic Literature Classification Numbers: D4, D44, D5, D51.

    Original languageEnglish (US)
    Pages (from-to)95-124
    Number of pages30
    JournalJournal of Economic Theory
    Volume87
    Issue number1
    DOIs
    StatePublished - Jul 1999

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    Walrasian equilibrium
    Substitute
    Economics
    Indivisibility
    Payment
    Vickrey-Clarke-Groves mechanism

    ASJC Scopus subject areas

    • Economics and Econometrics

    Cite this

    Walrasian equilibrium with gross substitutes. / Gul, Faruk; Stacchetti, Ennio.

    In: Journal of Economic Theory, Vol. 87, No. 1, 07.1999, p. 95-124.

    Research output: Contribution to journalArticle

    Gul, Faruk ; Stacchetti, Ennio. / Walrasian equilibrium with gross substitutes. In: Journal of Economic Theory. 1999 ; Vol. 87, No. 1. pp. 95-124.
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