Dynamics, Stability, and Foresight in the Shapley-Scarf Housing Market

While most of the literature starting with Shapley and Scarf (1974) have considered a static exchange economy with indivisibilities, this paper studies the dynamics of such an economy. We find that both the dynamics generated by competitive equilibrium and the one generated by weakly dominance relation, converge to a set of allocations we define as strictly stable, which we can show to exist. Moreover, we show that even when only pairwise exchanges between two traders are allowed, the strictly stable allocations are attained eventually if traders are sufficiently farsighted.Indivisible Goods Market, Dynamics, Competitive Allocation, Strict Core, Foresight, Stable Set

Interregional Mixed Duopoly, Location and Welfare

This paper investigates the effect of a local public enterprise on locations of firms and welfare in an interregional mixed duopoly. We employ a spatial model (linear city model) by dividing a linear city into two districts and assume that there are two firms each of which has different home district. One of them is a local public enterprise owned by the local government which reigns over one of the districts, while the other is a private firm. The local public enterprise is characterized as the one which maximizes welfare of its own district. We show that our two-stage game composed of the location choice and the price competition has two types of equilibria. One is that the two firms are located in the different districts and the other is that they are in the same district whose local government owns the local public enterprise. We consider the equilibrium selection problem. Moreover, we examine the changes in ownership of firms as the central or local government policy