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Balancing supply and demand under bilateral constraints

Author

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  • ,

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

  • Ilkilic, Rahmi

    (Department of Economics, Maastricht University)

  • ,

    (Department of Economics, Rice University)

  • ,

    (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.

Suggested Citation

  • , & Ilkilic, Rahmi & , & ,, 2012. "Balancing supply and demand under bilateral constraints," Theoretical Economics, Econometric Society, vol. 7(3), September.
    • Handle: RePEc:the:publsh:893
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    Cited by:

    1. Han, Lining & Juarez, Ruben, 2018. "Free intermediation in resource transmission," Games and Economic Behavior, Elsevier, vol. 111(C), pages 75-84.
    2. Hervé Moulin & Jay Sethuraman, 2013. "The Bipartite Rationing Problem," Operations Research, INFORMS, vol. 61(5), pages 1087-1100, October.
    3. Rahmi İlkılıç & Çağatay Kayı, 2014. "Allocation rules on networks," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 43(4), pages 877-892, December.
    4. Ning Chen & Nick Gravin & Pinyan Lu, 2014. "Truthful Generalized Assignments via Stable Matching," Mathematics of Operations Research, INFORMS, vol. 39(3), pages 722-736, August.
    5. Karol Flores-Szwagrzak, 2017. "Efficient, fair, and strategy-proof (re)allocation under network constraints," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 48(1), pages 109-131, January.
    6. Chandramouli, Shyam & Sethuraman, Jay, 2017. "Groupstrategyproofness of the egalitarian mechanism for constrained rationing problems," Mathematical Social Sciences, Elsevier, vol. 90(C), pages 111-118.
    7. Szwagrzak, Karol, 2014. "Strategy-proof market clearing mechanisms," Discussion Papers on Economics 4/2014, University of Southern Denmark, Department of Economics.
    8. Moulin, Hervé, 2017. "One dimensional mechanism design," Theoretical Economics, Econometric Society, vol. 12(2), May.
    9. Karol Flores-Szwagrzak, 2016. "The replacement principle in networked economies with single-peaked preferences," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 47(4), pages 763-789, December.
    10. Schauf, Andrew & Oh, Poong, 2021. "Myopic reallocation of extraction improves collective outcomes in networked common-pool resource games," SocArXiv w2cxp, Center for Open Science.
    11. Moulin, Hervé, 2016. "Entropy, desegregation, and proportional rationing," Journal of Economic Theory, Elsevier, vol. 162(C), pages 1-20.
    12. Nicolò, Antonio & Salmaso, Pietro & Sen, Arunava & Yadav, Sonal, 2023. "Stable sharing," Games and Economic Behavior, Elsevier, vol. 141(C), pages 337-363.

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    More about this item

    Keywords

    Bipartite graph; bilateral trade; strategy-proofness; equal treatment of equals; single-peaked preferences;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations

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