Theoretical Economics 17 (2022), 801–839

Several structural results for the set of competitive equilibria in trading networks with frictions are established: The lattice theorem, the rural hospitals theorem, the existence of side-optimal equilibria, and a group-incentive-compatibility result hold with imperfectly transferable utility and in the presence of frictions. While our results are developed in a trading network model, they also imply analogous (and new) results for exchange economies with combinatorial demand and for two-sided matching markets with transfers.

Keywords: Trading Networks, Full Substitutability, Imperfectly Transferable Utility, Competitive Equilibrium, Indivisible Goods, Frictions, Lattice, Rural Hospitals

JEL classification: C78, D47, D52, L14