A market

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 her 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.