Mechanisms for a spatially distributed market
We consider the problem of a spatially distributed market with strategic agents. A single good is traded in a set of independent markets, where shipment between markets is possible but costly. The problem has previously been studied in the non-strategic case, in which it can be analyzed and solved as a min-cost-flow problem. We consider the case where buyers and sellers are strategic. Our first result gives a double characterization of the VCG prices, first as distances in a certain residue graph and second as the minimal (for buyers) and maximal (for sellers) equilibrium prices. This provides a computationally efficient, individually rational and incentive compatible welfare maximizing mechanism. This mechanism is, necessarily, not budget balanced and we also provide a budget-balanced mechanism (which is also computationally efficient, incentive compatible and individually rational) that achieves high welfare. Finally, we present results for some extensions of the model.
Year of publication: |
2009
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Authors: | Babaioff, Moshe ; Nisan, Noam ; Pavlov, Elan |
Published in: |
Games and Economic Behavior. - Elsevier, ISSN 0899-8256. - Vol. 66.2009, 2, p. 660-684
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Publisher: |
Elsevier |
Keywords: | Mechanism design Spatially distributed market Auctions Vickrey-Clarke-Groves mechanism |
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