Gross Substitutes and Complements: A Simple Generalization
Economics Letters, 123(2), pp. 135-138.
14 Pages Posted: 19 Jun 2014 Last revised: 21 Jun 2014
Date Written: November 30, 2013
This paper extends the gross substitutes and complements (GSC) framework of Sun and Yang (2006) to a more general substitutes and complements structure. We show that competitive equilibrium with indivisible goods exists under significantly weaker, easily checkable, and interpretable conditions. We show that the dynamic double-track procedure developed by Sun and Yang (2008, 2009) can be extended to find the competitive equilibrium outcome. We also apply these insights to trading networks.
Keywords: indivisibilities, competitive equilibrium, substitutes, complements, auctions
JEL Classification: D44, D47, D51
Suggested Citation: Suggested Citation