Title

Market Design and Walrasian Equilibrium

Author(s)

Faruk R. Gul Faruk Gul (Princeton University)

Wolfgang Pesendorfer Wolfgang Pesendorfer (Princeton University)

Mu Zhang Mu Zhang (Princeton University)

Abstract

We establish the existence of Walrasian equilibrium for economies with many discrete goods and possibly one divisible good. Our goal is not only to study Walrasian equilibria in new settings but also to facilitate the use of market mechanisms in resource allocation problems such as school choice or course selection. We consider all economies with quasilinear gross substitutes preferences but allow agents to have limited quantities of the divisible good (limited transfers economies). We also consider economies without adivisible good (nontransferable utility economies). We show the existence and efficiency of Walrasian equilibrium in limited transfers economies and the existence and efficiency of strong (Walrasian) equilibrium in nontransferable utility economies. Finally, we show that various constraints on minimum and maximum levels of consumption and aggregate constraints of the kind that are relevant for school choice/course selection problems can be accommodated by either incorporating these constraints into individual preferences or by incorporating a suitable production technology into nontransferable utility economies

Creation Date

2020-06

Section URL ID

Paper Number

2020-38

URL

https://www.dropbox.com/s/xrbjk83ubf6vx1a/walras.pdf?dl=0

File Function

Jel

D50, D59

Keyword(s)

Walrasian equilibrium

Suppress

false

Series

13