A Fast and Simple Algorithm for Computing Market Equilibria
- Cite this paper as:
- Fleischer L., Garg R., Kapoor S., Khandekar R., Saberi A. (2008) A Fast and Simple Algorithm for Computing Market Equilibria. In: Papadimitriou C., Zhang S. (eds) Internet and Network Economics. WINE 2008. Lecture Notes in Computer Science, vol 5385. Springer, Berlin, Heidelberg
Homogeneous utilities of degree α ∈ [0,1] in Fisher economies — this includes Linear, Leontief, Cobb-Douglas
Resource allocation utilities like multi-commodity flows
Further, we give a natural and decentralized price-adjusting algorithm in these economies. Our algorithm, mimics the natural tâtonnement dynamics for the markets as suggested by Walras: it iteratively adjusts a good’s price upward when the demand for that good under current prices exceeds its supply; and downward when its supply exceeds its demand. The algorithm computes an approximate equilibrium in a number of iterations that is independent of the number of traders and is almost linear in the number of goods. Interestingly, our algorithm applies to certain classes of utility functions that are not weak gross substitutes.
Unable to display preview. Download preview PDF.