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Strategy-proof market clearing mechanisms

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  • Szwagrzak, Karol

    ()
    (Department of Business and Economics)

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    Abstract

    Consider a market for a resource under disequilibrium prices where suppliers and demanders are privately informed about their optimal supply and consumption levels. Strategy-proof market clearing mechanisms give suppliers and demanders dominant strategy incentives to truthfully reveal this information. We describe the class of strategy-proof and efficient mechanisms responding well to changes in supplies and demands, as formalized by the "replacement principle" (Thomson, 2007). Since no symmetry or anonymity conditions are imposed, these mechanisms can implement a wide array of distributional objectives in both indivisible and divisible resource allocation situations. These mechanisms apply to allocation problems involving network constraints modeling necessary conditions for a transfer of the resource from a supplier to a demander.

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    File URL: http://static.sdu.dk/mediafiles//E/E/D/%7BEEDE664A-5E67-4367-8B5E-08DAE391A008%7Ddpbe4_2014.pdf
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    Bibliographic Info

    Paper provided by Department of Business and Economics, University of Southern Denmark in its series Discussion Papers of Business and Economics with number 4/2014.

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    Length: 29 pages
    Date of creation: 06 Mar 2014
    Date of revision:
    Handle: RePEc:hhs:sdueko:2014_004

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    Postal: Department of Business and Economics, University of Southern Denmark, Campusvej 55, DK-5230 Odense M, Denmark
    Phone: 65 50 32 33
    Fax: 65 50 32 37
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    Web page: http://www.sdu.dk/ivoe
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    Related research

    Keywords: Strategy-proofness; Replacement principle; Network constraints; Indivisible resourcces;

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Jordi MassóAuthor-Email: jordi.masso@uab.es & Alejandro Neme, 2003. "Bribe-proof Rules in the Division Problem," UFAE and IAE Working Papers 571.03, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    2. Satterthwaite, Mark A & Sonnenschein, Hugo, 1981. "Strategy-Proof Allocation Mechanisms at Differentiable Points," Review of Economic Studies, Wiley Blackwell, vol. 48(4), pages 587-97, October.
    3. Thomson, William, 1997. "The Replacement Principle in Economies with Single-Peaked Preferences," Journal of Economic Theory, Elsevier, vol. 76(1), pages 145-168, September.
    4. William Thomson, 1999. "Welfare-domination under preference-replacement: A survey and open questions," Social Choice and Welfare, Springer, vol. 16(3), pages 373-394.
    5. William Thomson, 2007. "Fair Allocation Rules," RCER Working Papers 539, University of Rochester - Center for Economic Research (RCER).
    6. Thomson, William, 2003. "Axiomatic and game-theoretic analysis of bankruptcy and taxation problems: a survey," Mathematical Social Sciences, Elsevier, vol. 45(3), pages 249-297, July.
    7. Salvador Barbera, 1995. "Strategy-Proof Allotment Rules," Discussion Papers 1142, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    8. Bochet, Olivier & Ilkilic, Rahmi & Moulin, Hervé & Sethuraman, Jay, 2012. "Balancing supply and demand under bilateral constraints," Theoretical Economics, Econometric Society, vol. 7(3), September.
    9. Moulin, Herve & Bogomolnaia, Anna, 2001. "Random Matching under Dichotomous Preferences," Working Papers 2001-03, Rice University, Department of Economics.
    10. Moulin, Herve, 1987. "The Pure Compensation Problem: Egalitarianism versus Laissez-Fairism," The Quarterly Journal of Economics, MIT Press, vol. 102(4), pages 769-83, November.
    11. Özgür Kıbrıs & Serkan Küçükşenel, 2009. "Uniform trade rules for uncleared markets," Social Choice and Welfare, Springer, vol. 32(1), pages 101-121, January.
    12. Bochet, Olivier & İlkılıç, Rahmi & Moulin, Hervé, 2013. "Egalitarianism under earmark constraints," Journal of Economic Theory, Elsevier, vol. 148(2), pages 535-562.
    13. Lensberg, Terje, 1987. "Stability and Collective Rationality," Econometrica, Econometric Society, vol. 55(4), pages 935-61, July.
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