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On a Fundamental Property of Talman-Yang's Auction under Price Control

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  • Zaifu Yang
  • Dongmo Zhang

Abstract

Recently Talman and Yang (2008) examined an assignment market under price control. In the market a number of heterogeneous items are to be sold to several bidders. Each bidder has a valuation on each item. The seller has a reservation price for every item. Meanwhile every item has a ceiling price imposed by a central planner. Due to price controls, there usually do not exist market-clearing prices. To deal with this allocation problem, Talman and Yang proposed a dynamic auction with rationing that always yields a constrained equilibrium. In this paper we establish that this dynamic auction can actually ï¬ nd a core allocation infinite steps, resulting in a Pareto efficient outcome. A core allocation consists of an assignment of items and a supporting price vector for the assignment.

Suggested Citation

  • Zaifu Yang & Dongmo Zhang, 2013. "On a Fundamental Property of Talman-Yang's Auction under Price Control," Discussion Papers 13/06, Department of Economics, University of York.
  • Handle: RePEc:yor:yorken:13/06
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    References listed on IDEAS

    as
    1. Herings, P. Jean-Jacques & Konovalov, Alexander, 2009. "Constrained suboptimality when prices are non-competitive," Journal of Mathematical Economics, Elsevier, vol. 45(1-2), pages 43-58, January.
    2. Weddepohl, Claus, 1987. "Supply-constrained equilibria in economies with indexed prices," Journal of Economic Theory, Elsevier, vol. 43(2), pages 203-222, December.
    3. 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.
    4. Dehez, Pierre & Dreze, Jacques H., 1984. "On supply-constrained equilibria," Journal of Economic Theory, Elsevier, vol. 33(1), pages 172-182, June.
    5. 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.
    6. Tommy Andersson & Lars‐Gunnar Svensson, 2014. "Non‐Manipulable House Allocation With Rent Control," Econometrica, Econometric Society, vol. 82(2), pages 507-539, March.
    7. Richard Arnott, 1995. "Time for Revisionism on Rent Control?," Journal of Economic Perspectives, American Economic Association, vol. 9(1), pages 99-120, Winter.
    8. Kurz, Mordecai, 1982. "Unemployment equilibrium in an economy with linked prices," Journal of Economic Theory, Elsevier, vol. 26(1), pages 100-123, February.
    9. 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.
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    Cited by:

    1. Herings P.J.J., 2015. "Equilibrium and matching under price controls," Research Memorandum 001, Maastricht University, Graduate School of Business and Economics (GSBE).

    More about this item

    Keywords

    Ascending auction; multi-item auction; housing market; price control; Pareto efficiency; core.;

    JEL classification:

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

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