A top dog tale with preference complementarities

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• 作者：Emanuela Randon ; Peter Simmons
• 关键词：Exchange economy ; Complements ; Top dog allocation
• 刊名：Journal of Economics
• 出版年：2017
• 出版时间：January 2017
• 年：2017
• 卷：120
• 期：1
• 页码：47-63
• 全文大小：
• 刊物主题：Economics, general; Economic Theory/Quantitative Economics/Mathematical Methods; Microeconomics; Macroeconomics/Monetary Economics//Financial Economics; Public Finance; Game Theory, Economics, Social
• 出版者：Springer Vienna
• ISSN：1617-7134
• 卷排序：120

文摘

The emergence of a winner-take-all (top dog) outcome is generally due to political or institutional constraints or to specific technological features which favour the performance of just one individual. In this paper we provide a different explanation for the occurrence of a top-dog equilibrium in exchange economies. We show that once heterogeneous complementarities (i.e. Scarf’s preferences) are analysed with general endowment distributions, a variety of equilibria different from the well-known symmetric outcome with full utilisation of resources can emerge. Specifically, we show that stable corner equilibria with a winner-take-all (top dog) individual arise that are Pareto optima although the remaining individuals are no better off than with zero consumption and resources can be unused. Because of heterogenous complementarities, market mechanisms are weak and cannot overcome the top dog’s power. Voting mechanisms or taxation policies can reduce the top dog’s privileged position.