Lone Wolves in Competitive Equilibria
22 Pages Posted: 3 Jan 2018
Date Written: December 23, 2017
This paper develops a class of equilibrium-independent predictions of competitive equilibrium with indivisibilities. Specifically, we prove an analogue of the “Lone Wolf Theorem” of classical matching theory, showing that when utility is perfectly transferable, any agent who does not participate in trade in one competitive equilibrium must receive her autarky payoff in every competitive equilibrium. Our results extend to approximate equilibria and to settings in which utility is only approximately transferable.
Keywords: Indivisibilities; Matching; Lone Wolf Theorem
JEL Classification: C78, D47, D51
Suggested Citation: Suggested Citation