The Reactive Bargaining Set in Exchange Economies W Ith Indivisibilities and Money

The paper investigates the reactive bargaining set, a solution con­ cept for TU-games introduced by Granot (1994), in economies in which agents exchange indivisible goods and one perfectly divisible good (money). Under the assumptions that the preferences of the agents are quasi-linear and the initial endowments satisfy the Total Abundance condition, which is an abundance con­ dition on the money supply, it is shown that the reactive bargaining set is non­ empty. Furthermore, we prove that, in an exchange economy, this bargaining set and the (strong) core coincide if and only if the reactive bargaining set and the core of the underlying TU-game coincide.