Trading Networks with General Preferences

Abstract

We study bilateral trading networks with imperfectly transferable utility and frictions. Several structural results for the set of competitive equilibria in trading networks are established: The lattice theorem, the rural hospitals theorem, the existence of side-optimal equilibria, compactness of the set of equilibria and a group-incentive-compatibility result hold without the assumption of quasi-linear utility in transfers. 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.