Minimum Price Equilibrium in the Assignment Market

ISER Discussion Paper No. 1047, 2019

55 Pages Posted: 6 May 2019

See all articles by Yu Zhou

Yu Zhou

Osaka University, Graduate School of Economics, Students

Shigehiro Serizawa

Osaka University - Institute of Social and Economic Research (ISER)

Date Written: January 22, 2019

Abstract

We investigate an assignment market where multiple objects are assigned, together with associated payments, to a group of agents with unit demand preferences. Preferences over bundles, the pairs of (object, payment), accommodate income effects. Among all (Walrasian) equilibria in such a market, there is one supported by the coordinate-wise minimum prices, the minimum price equilibrium (MPE). We propose a price adjustment process, "the Serial Vickrey process," that finds an MPE in a finite number of steps. The Serial Vickrey process introduces objects one by one, and on the basis of the structural properties of MPE, the "Serial Vickrey sub-process" sequentially finds an MPE for k+1 objects by using an MPE for k objects. In the Serial Vickrey process, instead of revealing the whole preference, each agent only reports finitely many "indifference prices." We also discuss the application of the Serial Vickrey process to calibrate agents' utility functions in the quantitative analysis of housing market research in the assignment model.

Keywords: assignment market, minimum price equilibrium, income effects, Serial Vickrey process, housing market

JEL Classification: C63, C70, D44

Suggested Citation

Zhou, Yu and Serizawa, Shigehiro, Minimum Price Equilibrium in the Assignment Market (January 22, 2019). ISER Discussion Paper No. 1047, 2019, Available at SSRN: https://ssrn.com/abstract=3322207 or http://dx.doi.org/10.2139/ssrn.3322207

Yu Zhou

Osaka University, Graduate School of Economics, Students ( email )

1-7 Machikaneyama
Toyonaka, Osaka 560-0043
Japan
08038157212 (Phone)

Shigehiro Serizawa (Contact Author)

Osaka University - Institute of Social and Economic Research (ISER) ( email )

6-1 Mihogaoka
Ibaraki, Osaka 567-0047
Japan
+81 6 6879 8558 (Phone)
+81 6 6878 2766 (Fax)

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