Hedonic pricing with quasi-linear preferences is shown to be equivalent to stable matching with transferable utilities and a participation constraint, and to an optimal transportation (Monge-Kantorovich) linear programming problem. Optimal assignments in the latter correspond to stable matchings, and to hedonic equilibria. These assignments are shown to exist in great generality; their marginal indirect payoffs with respect to agent type are shown to be unique whenever direct payoffs vary smoothly with type. Under a generalized Spence-Mirrlees condition (also known as a twist condition) the assignments are shown to be unique and to be pure, meaning the matching is one-to-one outside a negligible set. For smooth problems set on compact, connected type spaces such as the circle, there is a topological obstruction to purity, but we give a weaker condition still guaranteeing uniqueness of the stable match. © 2009 Springer-Verlag.
CITATION STYLE
Chiappori, P. A., McCann, R. J., & Nesheim, L. P. (2009). Hedonic price equilibria, stable matching, and optimal transport: Equivalence, topology, and uniqueness. Economic Theory, 42(2), 317–354. https://doi.org/10.1007/s00199-009-0455-z
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