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Large Indivisibles: An Analysis with Respect to Price Equilibrium and Fairness

Lars-Gunnar Svensson

Abstract

An exchange economy is considered in which there are a finite number of individuals, the same number of indivisibles, and a fixed amount of a divisible good. Each individual consumes exactly one of the indivisibles and a certain quantity of the divisible good. The existence of prices corresponding to Pareto-efficient allocations is proved. It is also shown that this economy possesses fair allocations, income-fair allocations, coalition-fair allocations, and Pareto-efficient egalitarian-equivalent allocations.