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Core and pricing equilibria in combinatorial exchanges

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  • Bichler, Martin
  • Waldherr, Stefan

Abstract

We study assignment problems where individuals trade packages consisting of several objects. In a seminal paper Bikhchandani and Ostroy (2002) have shown that the efficient assignments can be formulated as a linear programming problem. The pricing equilibria introduced by them do not always fill out the core in a combinatorial exchange. We introduce a linear programming formulation where we can easily identify in the dual problem whether the core is empty, and for which the pricing equilibrium always coincides with the core when it is not empty.

Suggested Citation

  • Bichler, Martin & Waldherr, Stefan, 2017. "Core and pricing equilibria in combinatorial exchanges," Economics Letters, Elsevier, vol. 157(C), pages 145-147.
    • Handle: RePEc:eee:ecolet:v:157:y:2017:i:c:p:145-147
    DOI: 10.1016/j.econlet.2017.06.003
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    References listed on IDEAS

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    1. Nicholas Georgescu-Roegen, 1979. "Methods in Economic Science," Journal of Economic Issues, Taylor & Francis Journals, vol. 13(2), pages 317-328, June.
    2. de Vries, Sven & Schummer, James & Vohra, Rakesh V., 2007. "On ascending Vickrey auctions for heterogeneous objects," Journal of Economic Theory, Elsevier, vol. 132(1), pages 95-118, January.
    3. Bikhchandani, Sushil & Ostroy, Joseph M., 2002. "The Package Assignment Model," Journal of Economic Theory, Elsevier, vol. 107(2), pages 377-406, December.
    4. O'Neill, Richard P. & Sotkiewicz, Paul M. & Hobbs, Benjamin F. & Rothkopf, Michael H. & Stewart, William R., 2005. "Efficient market-clearing prices in markets with nonconvexities," European Journal of Operational Research, Elsevier, vol. 164(1), pages 269-285, July.
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    Cited by:

    1. Martin Bichler & Johannes Knörr & Felipe Maldonado, 2023. "Pricing in Nonconvex Markets: How to Price Electricity in the Presence of Demand Response," Information Systems Research, INFORMS, vol. 34(2), pages 652-675, June.
    2. Martin Bichler & Hans Ulrich Buhl & Johannes Knörr & Felipe Maldonado & Paul Schott & Stefan Waldherr & Martin Weibelzahl, 2022. "Electricity Markets in a Time of Change: A Call to Arms for Business Research," Schmalenbach Journal of Business Research, Springer, vol. 74(1), pages 77-102, March.

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