Market Equilibrium with Transaction Costs

  • Sourav Chakraborty
  • Nikhil R. Devanur
  • Chinmay Karande
Conference paper

DOI: 10.1007/978-3-642-17572-5_43

Part of the Lecture Notes in Computer Science book series (LNCS, volume 6484)
Cite this paper as:
Chakraborty S., Devanur N.R., Karande C. (2010) Market Equilibrium with Transaction Costs. In: Saberi A. (eds) Internet and Network Economics. WINE 2010. Lecture Notes in Computer Science, vol 6484. Springer, Berlin, Heidelberg

Abstract

Identical products being sold at different prices in different locations is a common phenomenon. To model such scenarios, we supplement the classical Fisher market model by introducing transaction costs. For every buyer i and good j, there is a transaction cost of cij; if the price of good j is pj, then the cost to the buyer iper unit of j is pj + cij. The same good can thus be sold at different (effective) prices to different buyers. We provide a combinatorial algorithm that computes ε-approximate equilibrium prices and allocations in \(O\left(\frac{1}{\epsilon}(n+\log{m})mn\log(B/\epsilon)\right)\) operations - where m is the number goods, n is the number of buyers and B is the sum of the budgets of all the buyers.

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Copyright information

© Springer-Verlag Berlin Heidelberg 2010

Authors and Affiliations

  • Sourav Chakraborty
    • 1
  • Nikhil R. Devanur
    • 2
  • Chinmay Karande
    • 3
  1. 1.Chennai Mathematical InstituteIndia
  2. 2.Microsoft ResearchRedmond
  3. 3.Google Inc.Mountain View

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