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Balancing supply and demand under bilateral constraints
Author(s) -
Bochet Olivier,
İlkılıç Rahmi,
Moulin Hervé,
Sethuraman Jay
Publication year - 2012
Publication title -
theoretical economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.404
H-Index - 32
eISSN - 1555-7561
pISSN - 1933-6837
DOI - 10.3982/te893
Subject(s) - bipartite graph , homogeneous , microeconomics , commodity , supply and demand , economics , mathematical economics , graph , computer science , mathematics , combinatorics , finance , theoretical computer science
In a moneyless market, a nondisposable homogeneous commodity is reallocated between agents with single‐peaked preferences. Agents are either suppliers or demanders. Transfers between a supplier and a demander are feasible only if they are linked . The links form an arbitrary bipartite graph. Typically, supply is short in one segment of the market, while demand is short in another. Our egalitarian transfer solution generalizes Sprumont's (1991) and Klaus et al.'s (1998) uniform allocation rules. It rations only the long side in each market segment, equalizing the net transfers of rationed agents as much as permitted by the bilateral constraints. It elicits a truthful report of both preferences and links: removing a feasible link is never profitable to either one of its two agents. Together with efficiency and a version of equal treatment of equals, these properties are characteristic.

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