https://macropaperwarehouse.com/authors/alexander-teytelboym/Alexander TeytelboymHugo -- gohugo.ioen-ushttps://macropaperwarehouse.com/papers/the-economics-of-equilibrium-with-indivisible-goods/https://macropaperwarehouse.com/papers/the-economics-of-equilibrium-with-indivisible-goods/<p>This paper develops an economic theory of competitive equilibrium with indivisible goods that accommodates both complementarities and substitutabilities. The central research question is: what conditions on demand are sufficient, and essentially necessary, for the existence of competitive equilibrium prices when goods are indivisible?</p> <p>The classical answer — gross substitutes (Kelso and Crawford, 1982) — entirely rules out complementarities. Complementarities matter in practice, yet prior work showed that equilibrium does not generally exist when all goods are complements (Bikhchandani and Mamer, 1997), while certain patterns of complementarities are compatible with equilibrium (Greenberg and Weber, 1986; Danilov, Koshevoy, and Lang, 2013). The economic content of which patterns permit equilibrium has remained opaque, previously accessible only through combinatorial or tropical geometry.</p>