Comparative Statics in Markets for Indivisible Goods

39 Pages Posted: 24 Aug 2010 Last revised: 2 Jul 2021

See all articles by Andrew Caplin

Andrew Caplin

New York University (NYU) - Department of Economics; National Bureau of Economic Research (NBER)

John V. Leahy

New York University (NYU) - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: August 2010

Abstract

We complete the study of comparative statics initiated in Caplin and Leahy [2010], which introduced a new mathematical apparatus for understanding NTU allocation markets, as such covering the housing market and other markets for large indivisible goods. 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.

Suggested Citation

Caplin, Andrew and Leahy, John V., Comparative Statics in Markets for Indivisible Goods (August 2010). NBER Working Paper No. w16285, Available at SSRN: https://ssrn.com/abstract=1662279

Andrew Caplin (Contact Author)

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John V. Leahy

New York University (NYU) - Department of Economics ( email )

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