Scandinavian Working Papers in Economics

Working Papers,
Lund University, Department of Economics

No 2002:14: Strategy-Proofness, Core, and Sequential Trade

Lars-Gunnar Svensson () and Bo Larsson ()
Additional contact information
Lars-Gunnar Svensson: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden
Bo Larsson: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden

Abstract: We extend the Shapley-Scarf (1974) model - where a finite number of indivisible objects is to be allocated among a finite number of individuals - to the case where the primary endowment set of an individual may contain none, one, or several objects and where property rights may be transferred (objects inherited) as the allocation process unfolds, under the retained assumption that an individual consumes at most one object. In this environment we analyze the core of the economy and characterize the set of strategy-proof and Pareto efficient mechanisms. From a dual perspective, we consider property rights implicitly defined by a strategy-proof and Pareto efficient mechanism and show a core property for the mechanism-induced endowment rule.

Keywords: Strategy-proof; core; housing market; sequential trade

JEL-codes: C71; C78; D71; D78

28 pages, First version: February 4, 2002. Revised: May 9, 2003.

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