Walrasian equilibrium with gross substitutes

We study economies with indivisibilities that satisfy the gross substitutes (GS) condition. The simplest example of GS preferences are unit demand pre ferences. We prove that the set of GS preferences is the largest set contai ning unit demand preferences for which the existence of Walrasian equilibri um is guaranteed. We show that if a GS economy is replicated sufficiently m any times, the equilibrium payment of any agent in the Vickrey-Clarke-Grove s mechanism is equal to the value of the allocation he receives at the smal lest Walrasian prices. The model extended to include production. Journal of Economic Literature classification Numbers: D4, D44, D5, D51. (C) 1999 Aca demic Press.