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Foundations of pseudomarkets : walrasian equilibria for discrete resources


Miralles, Antonio; Pycia, Marek (2020). Foundations of pseudomarkets : walrasian equilibria for discrete resources. Discussion Paper Series DP15161, CEPR.

Abstract

We study the assignment of objects in environments without transfers allowing for single-unit and general multi-unit demands, and any linear constraints, thus covering a wide range of applied environments, from school choice to course allocation. We establish the Second Welfare Theorem for these environments despite them failing the local non-satiation condition that previous studies of the Second Welfare Theorem relied on. We also prove a strong version of the First Welfare Theorem. We thus show that the link between efficiency and decentralization through prices is valid in environments without transfers, and hence provide a foundation for pseudomarket- based market design by showing that the restriction to such mechanisms is without loss of generality.

Abstract

We study the assignment of objects in environments without transfers allowing for single-unit and general multi-unit demands, and any linear constraints, thus covering a wide range of applied environments, from school choice to course allocation. We establish the Second Welfare Theorem for these environments despite them failing the local non-satiation condition that previous studies of the Second Welfare Theorem relied on. We also prove a strong version of the First Welfare Theorem. We thus show that the link between efficiency and decentralization through prices is valid in environments without transfers, and hence provide a foundation for pseudomarket- based market design by showing that the restriction to such mechanisms is without loss of generality.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Language:English
Date:12 August 2020
Deposited On:18 Dec 2020 07:07
Last Modified:18 Dec 2020 07:09
Series Name:Discussion Paper Series
Number of Pages:31
ISSN:0265-8003
OA Status:Green
Free access at:Official URL. An embargo period may apply.
Official URL:http://cepr.org/active/publications/discussion_papers/dp.php?dpno=15161

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