Existence of an Equilibrium in a Competitive Economy with Indivisibilities and Money

G. van der Laan, A.J.J. Talman, Z.F. Yang

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Abstract

In this paper we introduce a model of an exchange economy with indivisible goods and money.There are nitely many agents each of whom owns one unit of each of nitely many di erent types of indivisible goods and certain amount of money. Each type of indivisible good is subject to quality di erentiation.We demonstrate that under fairly mild conditions on demand the economy has a price equilibrium.The proof is based on a generalization of the well-known lemma of Knaster, Kuratowski and Mazurkiewicz (KKM) in combinatorial topology.The results in the paper generalize those of Gale in case of just one indivisible good present in the economy.
Original languageEnglish
Place of PublicationTilburg
PublisherMicroeconomics
Number of pages12
Volume1996-35
Publication statusPublished - 1996

Publication series

NameCentER Discussion Paper
Volume1996-35

Keywords

  • equilibrium theory
  • combinatorics
  • money

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