Corelab Seminar

Markos Epitropou
Competitive Equilibrium and Trading Networks: A Network Flow Approach

In trading networks where agents exchange indivisible goods (or indivisible contracts), recent literature has established that under a full substitutability condition on agents’ preferences, a competitive equilibrium exists. Moreover, competitive equilibria of trading networks are also stable outcomes, which is equivalent to the seemingly weaker chain stability condition. This paper’s contribution is to show that under the full substitutability assumption, all these results can be obtained simply and directly from the optimality conditions of a generalized submodular flow problem in an appropriately defined network.