Competitive equilibrium with indivisibilities

This paper studies an exchange economy with a finite number of agents in which each agents is initially endowed with a finite number of (personalized) indivisible commodities. We observe that the equivalence theorem of the core and the competitive equilibrium may not hold for this economy when the coalitional form game is generated in the standard manner. We provide an alternative definition of the coalitional form game to resolve this problem so that the balancedness of the new defined game provides a useful necessary and sufficient condition for the existence of competitive equilibrium for the original economy. (C) 1998 Academic Press.