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.

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Hedonic price equilibria, stable matching, and optimal transport: equivalence, topology, and uniqueness

The Monge–Kantorovich transportation problem involves optimizing with respect to a given a cost function. Uniqueness is a fundamental open question about which little is known when the cost function is smooth and the landscapes containing the goods to be transported possess (non-trivial) topology. This question turns out to be closely linked to a delicate problem (# 111) of Birkhoff (Lattice Theory. Revised Edition, 1948): give a necessary and sufficient condition on the support of a joint probability to guarantee extremality among all measures which share its marginals. Fifty years of progress on Birkhoff’s question culminate in Hestir and Williams’ necessary condition which is nearly sufficient for extremality; we relax their subtle measurability hypotheses separating necessity from sufficiency slightly, yet demonstrate by example that to be sufficient certainly requires some measurability. Their condition amounts to the vanishing of the measure γ outside a countable alternating sequence of graphs and antigraphs in which no two graphs (or two antigraphs) have domains that overlap, and where the domain of each graph/antigraph in the sequence contains the range of the succeeding antigraph (respectively, graph). Such sequences are called numbered limb systems. We then explain how this characterization can be used to resolve the uniqueness of Kantorovich solutions for optimal transportation on a manifold with the topology of the sphere.

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Optimal transportation, topology and uniqueness

Recent work has shown that extreme doubly stochastic measures are supported on sets that have no axial cycles. We give a new proof of this result and examine the supporting set structure more closely. It is shown that the property of no axial cycles leads to a tree like structure which naturally partitions the support into a collection of disjoint graphs of functions from the x-axis to the y-axis and from the y-axis to the x-axis. These functions are called a limb numbering system. It is shown that if the disjoint graphs in the limb numbering system are measurable, then the supporting set supports a unique doubly stochastic measure. Further, the limb structure can be used to develop a general method for constructing sets which support a unique doubly stochastic measure.

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Supports of doubly stochastic measures

The purpose of this note is to show that the solution to the Kantorovich optimal transportation problem is supported on a Lipschitz manifold, provided the cost is $C^{2}$ with non-singular mixed second derivative. We use this result to provide a simple proof that solutions to Monge's optimal transportation problem satisfy a change of variables equation almost everywhere.

Rectifiability of Optimal Transportation Plans

This is a review paper collecting both older and recent progress in the field of twodimensional marginal problem concerning the extreme points of the set of solutions. Some new results in the characterization of extremal solutions are presented in Section 5.

Extremal Solutions in the Marginal Problem

The purpose of this paper is to characterize the support of a probability measure P on a product XxY which is extremal in the set of measures having the same marginals as P. The paper continues the investigation started by G. Letac (1966) and by J. Denny (1980) dealing with a non-discrete version of the problem.

J. Štěpán

Papers

The Support of Extremal Probability Measures with Given Marginals