Abstract
This paper builds upon Caplin and Leahy (2014), which introduced a new mathematical apparatus for understanding allocation markets with nontransferable utility, as such covering the housing market and other markets for large indivisible goods. In the current paper we complete the study of comparative statics initiated therein. We introduce homotopy methods to characterize how equilibrium changes in response to arbitrary parameter changes. Generically, we show that there can be five and only five qualitatively distinct forms of market transition: Graft; Prune and Plant; Prune and Graft; Cycle and Reverse; and Shift and Replant. Our path-following methods identify new algorithms for computing market equilibria.
Original language | English (US) |
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Pages (from-to) | 80-94 |
Number of pages | 15 |
Journal | Journal of Mathematical Economics |
Volume | 90 |
DOIs | |
State | Published - Oct 2020 |
Keywords
- Allocation markets
- Indivisible goods
- Non-transferable utility
ASJC Scopus subject areas
- Economics and Econometrics
- Applied Mathematics