Equilibrium in quality markets, beyond the transferable case

Research Article
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Abstract

We consider the market for an indivisible quality good, in the tradition of standard hedonic equilibrium theory but replacing the commonly used quasi-linear assumption on consumers’ preferences by a more realistic nonlinear budget constraint. Taking advantage of quasi-linearity on the producer’s side, we prove that an optimal transport-like argument can still be used to derive existence of equilibria. We also discuss some simple one-dimensional examples.

Keywords

Quality markets Equilibrium Optimal transport Nontransferable models 

JEL Classification

C62 C78 

Notes

Acknowledgements

The authors are grateful to Alfred Galichon for many fruitful discussions. G.C. acknowledges the support of the Agence Nationale de la Recherche through the projects ISOTACE and MAGA.

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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2018

Authors and Affiliations

  1. 1.CEREMADE (UMR CNRS 7534)Université Paris-Dauphine, PSL Research UniversityParisFrance
  2. 2.MOKAPLAN, Inria ParisParisFrance

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