Mathematical Economics Letters
Editor-in-Chief: Alghalith , Moawia
Managing Editor: Boucekkine, Raouf
Middlemen in the Shapley-Shubik Competitive Markets for Indivisible Goods
We generalize the Shapley-Shubik market model for indivisible goods by considering the case where agents need middlemen to exchange their indivisible goods. In this model, there always exist competitive equilibria in which transaction takes place directly between sellers and buyers or indirectly through the middlemen. Furthermore, the incentives of middlemen to enter the market exist. We derive these results from the existence of an integral solution for a partitioning linear program.