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Copyright

Martin Osborne; Ariel Rubinstein

Published On

2020-03-27

Page Range

pp. 121-136

Language

  • English

Print Length

15 pages

A market

Chapter of: Models in Microeconomic Theory ('He' Edition)(pp. 121–136)
This chapter, unlike in the previous one, assumes that the ownership of a house is recognized and protected. Each house is initially owned by some individual. Houses can be exchanged only with the mutual consent of both owners; no individual can force another individual to give up his house.

The model allows us to introduce the central economic idea of prices as a means of guiding the individuals to a reallocation of the houses in which no group of individuals want to voluntarily exchange their houses.