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Balancing supply and demand under bilateral constraints

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Author Info

  • Bochet, Olivier

    ()
    (Department of Economics, University of Bern and Maastricht University)

  • Ilkilic, Rahmi

    ()
    (Department of Economics, Maastricht University)

  • Moulin, Hervé

    ()
    (Department of Economics, Rice University)

  • Sethuraman, Jay

    ()
    (Department of Industrial Engineering and Operations Research, Columbia University)

Abstract

In a moneyless market, a non storable, non transferable homogeneous commodity is reallocated between agents with single-peaked preferences. Agents are either suppliers or demanders. Transfers between a supplier and a demander are feasible only if they are linked, and the links form an arbitrary bipartite graph. Typically, supply is short in one segment of the market, while demand is short in another. Information about individual preferences is private, and so is information about feasible links: an agent may unilaterally close one of her links if it is in her interest to do so. Our egalitarian transfer solution rations only the long side in each market segment, equalizing the net transfers of rationed agents as much as permitted by the bilateral constraints. It elicits a truthful report of both preferences and links: removing a feasible link is never profitable to either one of its two agents. Together with efficiency, and a version of equal treatment of equals, these properties are characteristic.

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Bibliographic Info

Article provided by Econometric Society in its journal Theoretical Economics.

Volume (Year): 7 (2012)
Issue (Month): 3 (September)
Pages:

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Handle: RePEc:the:publsh:893

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Web page: http://econtheory.org

Related research

Keywords: Bipartite graph; bilateral trade; strategy-proofness; equal treatment of equals; single-peaked preferences;

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  1. Ehlers, L. & Klaus, B., 2001. "Probabilistic Assignements of Identical Indivisible Objects and Uniform Probabilistic Rules," Cahiers de recherche 2001-27, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
  2. Bettina Klaus & Hans Peters & Ton Storcken, 1998. "Strategy-proof division with single-peaked preferences and individual endowments," Social Choice and Welfare, Springer, vol. 15(2), pages 297-311.
  3. Corominas-Bosch, Margarida, 2004. "Bargaining in a network of buyers and sellers," Journal of Economic Theory, Elsevier, vol. 115(1), pages 35-77, March.
  4. Shapley, Lloyd & Scarf, Herbert, 1974. "On cores and indivisibility," Journal of Mathematical Economics, Elsevier, vol. 1(1), pages 23-37, March.
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Cited by:
  1. Rahmi Ilkilic, 2012. "Allocation rules on networks," DOCUMENTOS DE TRABAJO 009380, UNIVERSIDAD DEL ROSARIO.
  2. Szwagrzak, Karol, 2014. "Strategy-proof market clearing mechanisms," Discussion Papers of Business and Economics 4/2014, Department of Business and Economics, University of Southern Denmark.

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