Buying Several Indivisible Goods

UC Davis Working Paper No. 97-20

Posted: 23 Jul 1997

See all articles by Carmen Bevia

Carmen Bevia

Universidad de Alicante

Martine Quinzii

University of California, Davis - Department of Economics

José Silva Reus

Universidad de Alicante - Department of Economic Analysis

Date Written: June 1997

Abstract

This paper studies economies where agents exchange indivisible goods and money. Agents have potential use for all indivisible goods and the indivisible goods are differentiated. We assume that agents have quasi-linear utilities in money, have sufficient money endowments to afford any group of objects priced below their reservation values, have reservation values which are submodular and satisfy the Cardinality Condition. This Cardinality Condition requires that for each agent the marginal utility of an object only depends on the number of objects to which it is added, not on their characteristics. Under these assumptions, we show that the set of competitive equilibrium prices is a non empty lattice and that, in any equilibrium, the price of an object is between the social value of the object and its value in its second best use.

JEL Classification: D51

Suggested Citation

Bevia, Carmen and Quinzii, Martine and Silva Reus, José Angel, Buying Several Indivisible Goods (June 1997). UC Davis Working Paper No. 97-20. Available at SSRN: https://ssrn.com/abstract=10733

Carmen Bevia (Contact Author)

Universidad de Alicante ( email )

Campus de San Vicente, sn
Alicante, 03690
Spain

Martine Quinzii

University of California, Davis - Department of Economics ( email )

One Shields Drive
Davis, CA 95616-8578
United States
530-752-1567 (Phone)
530-752-9382 (Fax)

José Angel Silva Reus

Universidad de Alicante - Department of Economic Analysis ( email )

03080 Alicante
Spain
+34 96 590 3400 x 3254 (Phone)
+34 96 590 3898 (Fax)

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