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Foundations of pseudomarkets: Walrasian equilibria for discrete resources


Miralles, Antonio; Pycia, Marek (2021). Foundations of pseudomarkets: Walrasian equilibria for discrete resources. Working paper series / Department of Economics 385, University of Zurich.

Abstract

We study the assignment of discrete resources in a general model encompassing a wide range of applied environments, such as school choice, course allocation, and refugee resettlement. We allow single-unit and general multi-unit demands and any linear constraints. We prove the Second Welfare Theorem for these environments and a strong version of the First Welfare Theorem. In this way, we establish an equivalence between strong efficiency and decentralization through prices in discrete environments. Showing that all strongly efficient outcomes can be implemented through pseudomarkets, we provide a foundation for using pseudomarkets in market design.

Abstract

We study the assignment of discrete resources in a general model encompassing a wide range of applied environments, such as school choice, course allocation, and refugee resettlement. We allow single-unit and general multi-unit demands and any linear constraints. We prove the Second Welfare Theorem for these environments and a strong version of the First Welfare Theorem. In this way, we establish an equivalence between strong efficiency and decentralization through prices in discrete environments. Showing that all strongly efficient outcomes can be implemented through pseudomarkets, we provide a foundation for using pseudomarkets in market design.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Department of Economics
Dewey Decimal Classification:330 Economics
JEL Classification:D47, D50
Uncontrolled Keywords:Walrasian equilibrium, pseudomarkets, market design, revelation principle, welfare theorems, equilibrium existence, discrete markets, complementarities, constraints
Language:English
Date:May 2021
Deposited On:12 May 2021 12:15
Last Modified:13 May 2021 03:40
Series Name:Working paper series / Department of Economics
Number of Pages:30
ISSN:1664-705X
OA Status:Green
Official URL:https://www.econ.uzh.ch/en/research/workingpapers.html?paper-id=1067

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