An assignment model with local constraints: Competitive equilibrium and ascending auction

Lijun Pan, Linyu Peng, Yu Zhou

Research output: Contribution to journalArticle

Abstract

We consider an assignment model where each agent has unit-demand quasi-linear preferences and may face some local constraint, i.e., her possible assignment is restricted to a subset of items. Our model takes the assignment models without and with outside options, e.g., Andersson (2007) and Andersson et al. (2013), as special cases. We show that local constraints may lead to the non-existence of competitive equilibrium (CE), and provide a sufficient and necessary condition that ensures its existence. We establish the lattice of CE prices. Besides, an ascending auction is proposed, either finding a CE or validating its non-existence in finitely many steps. It generalizes Andersson et al. (2013)’s auction by adjusting increments stepwise.

Original languageEnglish
Article number108905
JournalEconomics Letters
Volume188
DOIs
Publication statusPublished - 2020 Mar
Externally publishedYes

Keywords

  • Ascending auction
  • Assignment model
  • Competitive equilibrium
  • Existence
  • Lattice
  • Local constraints

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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