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Foundations of pseudomarkets: Walrasian equilibria for discrete resources

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  • Miralles, Antonio
  • Pycia, Marek

Abstract

We study the assignment of discrete resources in a general model encompassing a wide range of applied environments, such as school choice, course allocation, and refugee resettlement. We allow single-unit and general multi-unit demands and any linear constraints. We prove the Second Welfare Theorem for these environments and a strong version of the First Welfare Theorem. In this way, we establish an equivalence between strong efficiency and decentralization through prices in discrete environments. Showing that all strongly efficient outcomes can be implemented through pseudomarkets, we provide a foundation for using pseudomarkets in market design.

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  • Miralles, Antonio & Pycia, Marek, 2021. "Foundations of pseudomarkets: Walrasian equilibria for discrete resources," Journal of Economic Theory, Elsevier, vol. 196(C).
    • Handle: RePEc:eee:jetheo:v:196:y:2021:i:c:s0022053121001204
    DOI: 10.1016/j.jet.2021.105303
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    Cited by:

    1. Pycia, Marek & Yenmez, M. Bumin, 2019. "Matching with Externalities," CEPR Discussion Papers 13994, C.E.P.R. Discussion Papers.
    2. Julien Combe & Vladyslav Nora & Olivier Tercieux, 2021. "Dynamic assignment without money: Optimality of spot mechanisms," Working Papers 2021-11, Center for Research in Economics and Statistics.
    3. Echenique, Federico & Miralles, Antonio & Zhang, Jun, 2021. "Fairness and efficiency for allocations with participation constraints," Journal of Economic Theory, Elsevier, vol. 195(C).
    4. Caterina Calsamiglia & Francisco Martínez-Mora & Antonio Miralles, 2021. "Random assignments and outside options," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 57(3), pages 557-566, October.

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    More about this item

    Keywords

    Random assignment; Pseudomarkets; Welfare theorems; Walrasian equilibrium; Discrete markets; Multi-unit demand; Single-unit demand; Complementarities; Constraints;
    All these keywords.

    JEL classification:

    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • D60 - Microeconomics - - Welfare Economics - - - General

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