Implementing Walrasian Equilibrium: the Languages of Product-Mix Auctions

Elizabeth Baldwin, Paul Klemperer and Edwin Lock

No 19457, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Product-mix auctions are sealed-bid mechanisms for trading multiple divisible or indivisible units of multiple differentiated goods. They implement competitive-equilibrium allocations when these exist, based on the bids that participants make in a simple geometric language. All concave substitutes (respectively, strong-substitutes) valuations can be uniquely represented, and no other valuations can be represented, by bids in the corresponding version of this language. This provides new characterisations of ordinary substitutes, and of strong substitutes, when goods are indivisible. We discuss implementation of the auctions, and extensions and variants of the language, e.g., allowing for budget constraints.

Keywords: Walrasian; equilibrium (search for similar items in EconPapers)
JEL-codes: D44 E58 (search for similar items in EconPapers)
Date: 2024-09
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