Advances in Mathematical Economics Volume 20 pp 103-128

Part of the Advances in Mathematical Economics book series (MATHECON, volume 20) | Cite as

On Differentiated and Indivisible Commodities: An Expository Re-framing of Mas-Colell’s 1975 Model

Expositional Review

Abstract

With a pure exchange economy and its Walrasian equilibrium formalized as a distribution on the space of consumer characteristics, Mas-Colell (J Math Econ 2:263–296, 1975) showed the existence of equilibrium in a pure exchange economy with differentiated and indivisible commodities. We present a variant of Mas-Colell’s theorem; but more than for its own sake, we use it to expose and illustrate recent techniques due to Keisler-Sun (Adv Math 221:1584–1607, 2009), as developed in Khan-Rath-Yu-Zhang (On the equivalence of large individualized and distributionalized games. Johns Hopkins University, mimeo, 2015), to translate a result on a large distributionalized economy (LDE) to a large individualized economy (LIE), when the former can be represented by a saturated or super-atomless measure space of consumers, as formalized in Keisler-Sun (Adv Math 221:1584–1607, 2009) and Podczeck (J Math Econ 44:836–852, 2008) respectively. This also leads us to identify, hitherto unnoticed, open problems concerning symmetrization of distributionalized equilibria of economies in their distributionalized formulations. In relating our result to the antecedent literature, we bring into salience the notions of (i)“overriding desirability of the indivisible commodity,” as in Hicks (A revision of demand theory. Clarendon Press, Oxford, 1956), Mas-Colell (J Econ Theory 16:443–456, 1977) and Yamazaki (Econometrica 46:541–555, 1978; Econometrica 49:639–654, 1981), and of (ii) “bounded marginal rates of substitution,” as in Jones (J Math Econ 12:119–138, 1983; Econometrica 52:507–530, 1984) and Ostroy-Zame (Econometrica 62:593–633, 1994). Our work also relies heavily on the technical notion of Gelfand integration.

Keywords

Exchange economy Differentiated commodities Indivisible commodities Large distributionalized economy Large individualized economy Cardinality of the set of consumers 

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Copyright information

© Springer Science+Business Media Singapore 2016

Authors and Affiliations

  1. 1.Department of EconomicsThe Johns Hopkins UniversityBaltimoreUSA
  2. 2.Department of EconomicsMeiji-Gakuin UniversityTokyoJapan

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