Nonseparable, concave utilities are easy -- in a perfect price discrimination market model

DOI10.1137/110841849MaRDI QIDQ5300494zbMATH OpenOpenAlexFDO

Authors Vijay V. Vazirani

Publication date 27 June 2013

Published in SIAM Journal on Discrete Mathematics (Search for Journal in Brave)

Full work available at URL https://arxiv.org/abs/1010.4281, https://semanticscholar.org/paper/7a5871485c871c139a94f0cfcfc5671fa88c5b4c

zbMATH Keywords

Fisher marketsmarket equilibrianonseparable concave untilitiesperfect price discrimination

Mathematics Subject Classification ID

Analysis of algorithms and problem complexity (68Q25) Analysis of algorithms (68W40) Convex programming (90C25) 2-person games (91A05) Combinatorial games (91A46) Auctions, bargaining, bidding and selling, and other market models (91B26) Resource and cost allocation (including fair division, apportionment, etc.) (91B32)

Abstract: Recent results, establishing evidence of intractability for such restrictive utility functions as additively separable, piecewise-linear and concave, under both Fisher and Arrow-Debreu market models, have prompted the question of whether we have failed to capture some essential elements of real markets, which seem to do a good job of finding prices that maintain parity between supply and demand. The main point of this paper is to show that even non-separable, quasiconcave utility functions can be handled efficiently in a suitably chosen, though natural, realistic and useful, market model; our model allows for perfect price discrimination. Our model supports unique equilibrium prices and, for the restriction to concave utilities, satisfies both welfare theorems.

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