Baldwin, Elizabeth and Klemperer, Paul (2016) Understanding preferences: "demand types", and the existence of equilibrium with indivisibilities. . London School of Economics and Political Science, London, UK.
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Abstract
We propose new techniques for understanding agents' valuations. Our classification into \demand types", incorporates existing definitions (substitutes, complements, \strong substitutes", etc.) and permits new ones. Our Unimodularity Theorem generalises previous results about when competitive equilibrium exists for any set of agents whose valuations are all of a \demand type" for indivisible goods. Contrary to popular belief, equilibrium is guaranteed for more classes of purely-complements, than of purely-substitutes, preferences. Our Intersection Count Theorem checks equilibrium existence for combinations of agents with specific valuations by counting the intersection points of geometric objects. Applications include matching and coalition-formation; and the Product-Mix Auction, introduced by the Bank of England in response to the financial crisis.
| Item Type: | Monograph (Working Paper) |
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| Official URL: | http://www.lse.ac.uk/ |
| Additional Information: | © 2016 The Authors |
| Divisions: | Grantham Research Institute |
| Subjects: | H Social Sciences > HB Economic Theory H Social Sciences > HC Economic History and Conditions Q Science > QA Mathematics |
| JEL classification: | C - Mathematical and Quantitative Methods > C6 - Mathematical Methods and Programming > C62 - Existence and Stability Conditions of Equilibrium D - Microeconomics > D4 - Market Structure and Pricing > D44 - Auctions D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D50 - General D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D51 - Exchange and Production Economies |
| Date Deposited: | 17 Aug 2015 11:08 |
| Last Modified: | 11 Dec 2024 19:20 |
| Projects: | ES/L003058/1, ES/L003058/1 |
| Funders: | Economic and Social Research Council, Economic and Social Research Council |
| URI: | http://eprints.lse.ac.uk/id/eprint/63198 |
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