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Competitive equilibria in matching models with financial constraints

Herings,P.J.J.
; 
Zhou,Yu
Abstract
We consider a matching with contracts model in which buyers face financial constraints. In this model, a competitive equilibrium may fail to exist. We therefore propose the new notion of quantity-constrained competitive equilibrium (QCCE). At a QCCE, buyers form expectations about the expected supply of trades. A buyer may expect that a trade is not to be supplied if the corresponding financial constraint is binding. We show the existence of QCCEs via a dynamic process that updates prices and quantity constraints, the equivalence between QCCE outcomes and stable outcomes, and some other properties of QCCEs like the lattice property.
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Date
2022-05
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Tilburg University Research Output Collection
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Keywords
AUCTIONS, STABILITY, NETWORKS
Citation
Herings, P J J & Zhou, Y 2022, 'Competitive equilibria in matching models with financial constraints', International Economic Review, vol. 63, no. 2, pp. 777-802. https://doi.org/10.1111/iere.12550
URI
https://hdl.handle.net/20.500.14602/77011
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