An assignment model with local constraints: Competitive equilibrium and ascending auction

Lijun Pan, Linyu Peng and Yu Zhou

Economics Letters, 2020, vol. 188, issue C

Abstract: We consider an assignment model where each agent has unit-demand quasi-linear preferences and may face some local constraint, i.e., her possible assignment is restricted to a subset of items. Our model takes the assignment models without and with outside options, e.g., Andersson (2007) and Andersson et al. (2013), as special cases. We show that local constraints may lead to the non-existence of competitive equilibrium (CE), and provide a sufficient and necessary condition that ensures its existence. We establish the lattice of CE prices. Besides, an ascending auction is proposed, either finding a CE or validating its non-existence in finitely many steps. It generalizes Andersson et al. (2013)’s auction by adjusting increments stepwise.

Keywords: Assignment model; Local constraints; Competitive equilibrium; Existence; Lattice; Ascending auction (search for similar items in EconPapers)
JEL-codes: D44 D47 D82 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:188:y:2020:i:c:s0165176519304562

DOI: 10.1016/j.econlet.2019.108905

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