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3 years ago

Stable outcomes in matching with budget constraints redefine competitive equilibria.

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Ravi Jagadeesan, Alexander Teytelboym

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The article explores how financial constraints impact matching with contracts. When buyers or sellers face budget limits, stable outcomes align with competitive equilibrium if incomes are sufficient. Otherwise, competitive equilibria may not exist, but stable outcomes align with quasiequilibrium. These stable outcomes are somewhat efficient but do not follow a specific pattern. The findings suggest that sealed-bid auctions and matching with budget constraints have potential applications.