Working Paper: NBER ID: w16284
Authors: Andrew Caplin; John V. Leahy
Abstract: Many important markets, such as the housing market, involve goods that are both indivisible and of budgetary significance. We introduce new graph theoretic techniques ideally suited to analyzing such markets. In this paper and its companion (Caplin and Leahy [2010]), we use these techniques to fully characterize the comparative static properties of these markets and to identify algorithms for computing equilibria.
Keywords: indivisible goods; market equilibrium; graph theory; comparative statics
JEL Codes: C63; D40; E1; R31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| minimum price equilibrium (D41) | optimization problems on gastructures (C61) |
| minimum price equilibrium (D41) | equilibria observed in markets (D53) |
| small discrete shocks to model parameters (C54) | local effects (F69) |
| nature of goods (indivisible vs. divisible) (L14) | extent of price changes (E30) |
| gastructures (L74) | entire set of competitive equilibria (D50) |
| changes in model parameters (C51) | reallocation of goods (F16) |
| maximizing the sum of prices across potential chains of indifference (D10) | minimum equilibrium price vector (D41) |