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


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.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

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

Personalised recommendations