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Balancing supply and demand under bilateral constraints

Author

Listed:
  • 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.

Suggested Citation

  • Bochet, Olivier & Ilkilic, Rahmi & Moulin, Hervé & Sethuraman, Jay, 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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    References listed on IDEAS

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    1. Lars Ehlers & Bettina Klaus, 2003. "Probabilistic assignments of identical indivisible objects and uniform probabilistic rules," Review of Economic Design, Springer;Society for Economic Design, pages 249-268.
    2. Corominas-Bosch, Margarida, 2004. "Bargaining in a network of buyers and sellers," Journal of Economic Theory, Elsevier, vol. 115(1), pages 35-77, March.
    3. Shapley, Lloyd & Scarf, Herbert, 1974. "On cores and indivisibility," Journal of Mathematical Economics, Elsevier, vol. 1(1), pages 23-37, March.
    4. Bettina Klaus & Hans Peters & Ton Storcken, 1998. "Strategy-proof division with single-peaked preferences and individual endowments," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 15(2), pages 297-311.
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    Citations

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    Cited by:

    1. 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.
    2. 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.
    3. repec:eee:matsoc:v:90:y:2017:i:c:p:111-118 is not listed on IDEAS
    4. Szwagrzak, Karol, 2014. "Strategy-proof market clearing mechanisms," Discussion Papers of Business and Economics 4/2014, University of Southern Denmark, Department of Business and Economics.
    5. Moulin, Hervé, 2017. "One dimensional mechanism design," Theoretical Economics, Econometric Society, vol. 12(2), May.
    6. 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.
    7. Moulin, Hervé, 2016. "Entropy, desegregation, and proportional rationing," Journal of Economic Theory, Elsevier, vol. 162(C), pages 1-20.

    More about this item

    Keywords

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

    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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