On the integration of Shapley-Scarf housing markets
Rajnish Kunar, Kriti Manocha, Josue Ortega
TL;DR
This paper examines the effects of merging Shapley-Scarf housing markets, revealing that while integration can cause welfare losses for some, it generally improves overall welfare and benefits most agents.
Contribution
It provides a detailed analysis of welfare impacts from market integration, highlighting conditions under which agents are harmed or benefit.
Findings
Market integration can cause welfare losses for some agents.
On average, integration enhances overall welfare.
Most agents benefit from market merging, especially in small or highly correlated markets.
Abstract
We study the welfare consequences of merging Shapley--Scarf markets. Market integration can lead to large welfare losses and make the vast majority of agents worse-off, but is on average welfare-enhancing and makes all agents better off ex-ante. The number of agents harmed by integration is a minority when all markets are small or agents' preferences are highly correlated.
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Taxonomy
TopicsGame Theory and Voting Systems · Economic theories and models · Housing Market and Economics