Comparative statics in markets for indivisible goods

Andrew Caplin, John Leahy

    Research output: Contribution to journalArticlepeer-review

    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 languageEnglish (US)
    Pages (from-to)80-94
    Number of pages15
    JournalJournal of Mathematical Economics
    Volume90
    DOIs
    StatePublished - Oct 2020

    Keywords

    • Allocation markets
    • Indivisible goods
    • Non-transferable utility

    ASJC Scopus subject areas

    • Economics and Econometrics
    • Applied Mathematics

    Fingerprint Dive into the research topics of 'Comparative statics in markets for indivisible goods'. Together they form a unique fingerprint.

    Cite this