A Graph Theoretic Approach to Markets for Indivisible Goods
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 ), we use these techniques to fully characterize the comparative static properties of these markets and to identify algorithms for computing equilibria.
We thank Mamoru Kaneko, John Leahy Sr., Jeffrey Mensch, Victor Norman, Ennio Stacchetti, and Ivan Werning for helpful comments. Leahy thanks the NSF for financial support. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.