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A dynamic auction for differentiated items under price rigidities

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  • Talman, Dolf
  • Yang, Zaifu

Abstract

A number of heterogeneous items are to be sold to several bidders. Each bidder demands at most one item. The price of each item is not completely flexible but restricted to some admissible interval. Due to price rigidities, a Walrasian equilibrium usually fails to exist. To facilitate the allocation of items to the bidders, we propose an efficient ascending auction with rationing that yields a constrained Walrasian equilibrium outcome in a finite number of steps.

Suggested Citation

  • Talman, Dolf & Yang, Zaifu, 2008. "A dynamic auction for differentiated items under price rigidities," Economics Letters, Elsevier, vol. 99(2), pages 278-281, May.
  • Handle: RePEc:eee:ecolet:v:99:y:2008:i:2:p:278-281
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    References listed on IDEAS

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    1. Dehez, Pierre & Dreze, Jacques H., 1984. "On supply-constrained equilibria," Journal of Economic Theory, Elsevier, vol. 33(1), pages 172-182, June.
    2. Demange, Gabrielle & Gale, David & Sotomayor, Marilda, 1986. "Multi-Item Auctions," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 863-872, August.
    3. Weddepohl, Claus, 1987. "Supply-constrained equilibria in economies with indexed prices," Journal of Economic Theory, Elsevier, vol. 43(2), pages 203-222, December.
    4. Crawford, Vincent P & Knoer, Elsie Marie, 1981. "Job Matching with Heterogeneous Firms and Workers," Econometrica, Econometric Society, vol. 49(2), pages 437-450, March.
    5. van der Laan, Gerard, 1980. "Equilibrium under Rigid Prices with Compensation for the consumers," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 21(1), pages 63-73, February.
    6. Jean-Jacques Herings & Dolf Talman & Zaifu Yang, 1996. "The Computation of a Continuum of Constrained Equilibria," Mathematics of Operations Research, INFORMS, vol. 21(3), pages 675-696, August.
    7. Kurz, Mordecai, 1982. "Unemployment equilibrium in an economy with linked prices," Journal of Economic Theory, Elsevier, vol. 26(1), pages 100-123, February.
    8. Cox, Charles C, 1980. "The Enforcement of Public Price Controls," Journal of Political Economy, University of Chicago Press, vol. 88(5), pages 887-916, October.
    9. Maskin, Eric S., 2000. "Auctions, development, and privatization: Efficient auctions with liquidity-constrained buyers," European Economic Review, Elsevier, vol. 44(4-6), pages 667-681, May.
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    Citations

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    Cited by:

    1. Andersson, Tommy & Yang, Zaifu & Zhang, Dongmo, 2015. "How to efficiently allocate houses under price controls?," Economics Letters, Elsevier, vol. 130(C), pages 97-99.
    2. Andersson, Tommy & Svensson, Lars-Gunnar, 2016. "Strategy-proof house allocation with price restrictions," Journal of Economic Theory, Elsevier, vol. 163(C), pages 167-177.
    3. repec:jmi:articl:jmi-v1i1a4 is not listed on IDEAS
    4. repec:eee:gamebe:v:107:y:2018:i:c:p:41-59 is not listed on IDEAS
    5. Herings P.J.J., 2015. "Equilibrium and matching under price controls," Research Memorandum 001, Maastricht University, Graduate School of Business and Economics (GSBE).
    6. Gerard van der Laan & Zaifu Yang, 2016. "An ascending multi-item auction with financially constrained bidders," The Journal of Mechanism and Institution Design, Society for the Promotion of Mechanism and Institution Design, University of York, vol. 1(1), pages 109-149, December.
    7. repec:eee:ecolet:v:155:y:2017:i:c:p:76-79 is not listed on IDEAS
    8. Andersson, Tommy & Svensson, Lars-Gunnar, 2018. "Sequential rules for house allocation with price restrictions," Games and Economic Behavior, Elsevier, vol. 107(C), pages 41-59.

    More about this item

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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