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Large vs. Continuum Assignment Economies: Efficiency and Envy-Freeness

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Working paper
Author/s: 
Antonio Miralles and Marek Pycia
Issue number: 
950
Series: 
Barcelona GSE Working Paper
Publisher: 
Barcelona Graduate School of Economics
Year: 
2017
Continuum models are often used to study large finite assignment economies. However, some subtleties must be taken into account. We show that in the large finite random assignment problem without transfers, Competitive Equilibrium with vanishing income differences does not asymptotically characterize the set of efficient and envy-free random assignment profiles. This is in sharp contrast with the continuum model counterpart (Ashlagi and Shi, 2015). The problem is driven by the failure of local non-satiation inherent in no-transfer assignment.
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