Lone wolves in competitive equilibria

This paper develops a class of equilibrium-independent predictions of competitive equilibrium with indivisibilities. Specifically, we prove an analogue of the "Lone Wolf Theorem" of classical matching theory for the Baldwin and Klemperer (Econometrica 87(3):867-932, 2019) model of exchange...

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Bibliographic Details
Published in:Social choice and welfare 2020-08, Vol.55 (2), p.215-228
Main Authors: Jagadeesan, Ravi, Kominers, Scott Duke, Rheingans-Yoo, Ross
Format: Article
Language:English
Subjects:
Competition
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
Equilibrium
Game Theory
International Political Economy
Original Paper
Public Finance
Social and Behav. Sciences
Social Policy
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Summary:This paper develops a class of equilibrium-independent predictions of competitive equilibrium with indivisibilities. Specifically, we prove an analogue of the "Lone Wolf Theorem" of classical matching theory for the Baldwin and Klemperer (Econometrica 87(3):867-932, 2019) model of exchange economies with transferable utility, showing that any agent who does not participate in trade in some competitive equilibrium must receive her autarky payoff in every competitive equilibrium. Our results extend to approximate equilibria and to settings in which utility is only approximately transferable.
ISSN:0176-1714
1432-217X
DOI:10.1007/s00355-019-01228-z