Constrained Pseudo-market Equilibrium

Federico Echenique, Antonio Miralles and Jun Zhang

Papers from arXiv.org

Abstract: We propose a pseudo-market solution to resource allocation problems subject to constraints. Our treatment of constraints is general: including bihierarchical constraints due to considerations of diversity in school choice, or scheduling in course allocation; and other forms of constraints needed to model, for example, the market for roommates, and combinatorial assignment problems. Constraints give rise to pecuniary externalities, which are internalized via prices. Agents pay to the extent that their purchases affect the value of relevant constraints at equilibrium prices. The result is a constrained efficient market equilibrium outcome. The outcome is fair whenever the constraints do not single out individual agents. Our result can be extended to economies with endowments, and address participation constraints.

Date: 2019-09, Revised 2020-11
New Economics Papers: this item is included in nep-des
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Constrained Pseudo-Market Equilibrium (2021)
Working Paper: Constrained Pseudo-Market Equilibrium (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:1909.05986

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