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A Matter of Equality: Linear Pricing in Combinatorial Exchanges
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2018 | Information Systems Research | Citations: 2
Authors: Bichler, Martin; Fux, Vladimir; Goeree, Jacob

Abstract: Combinatorial exchanges that allow for package offers to address nonconvexities ... Expand

Abstract: Combinatorial exchanges that allow for package offers to address nonconvexities in demand or supply typically employ linear and anonymous prices because they are simple, tractable, and fair. Despite their prevalence, linear anonymous prices do not necessarily correspond to Walrasian competitive equilibrium prices in such settings, and their impact is not well understood. This paper is the first to analyze the effect of different pricing rules on the efficiency of combinatorial exchanges, using both analytic methods and numerical experiments. Our analysis is motivated by a combinatorial fishery-rights exchange designed to reform the fishing industry in New South Wales (NSW), Australia. We find that when linearity and anonymity are required for only one side of the market, the average efficiency loss is negligible. In contrast, with a single linear price vector for both sides, the efficiency loss is substantial, especially when the market is small. In a formal model, we show that efficiency losses decrease when the number of buyers grows or the size of the submitted packages decreases. Besides the reform of the NSW fishing industry, our results have important implications for other cap-and-trade programs as well as other industries where demand or cost complementarities play a role. Collapse

Semantic filters: fish market

Topics: anonymity price management laptop computer IS economics electronic market

Methods: experiment simulation case study regression analysis method optimization model
Linear payment rules for combinatorial exchanges

2016 | International Conference on Information Systems | Citations: 0
Authors: Bichler, Martin; Fux, Vladimir; Goeree, Jacob

Abstract: Internet technology has led to an increasing number of two-sided markets with ma ... Expand

Abstract: Internet technology has led to an increasing number of two-sided markets with many buyers and sellers involved. In many of these markets there is a need for package bids such that bidders can express preferences for sets of objects which might be complements or substitutes. Such combinatorial markets have found wide-spread application. There is a substantial literature in IS and other disciplines on payment rules in single-sided combinatorial auctions. However, payment rules for two-sided combinatorial auctions (aka. combinatorial exchanges) are largely unexplored. Linear and anonymous competitive equilibrium prices are desirable but unfortunately they do not always exist in non-convex markets. We discuss the market design for a large-scale combinatorial exchange for fishery access rights. The specifics of the allocation problem lead to different ways how linear and anonymous prices can be computed. We analyze trade-offs of different payment rules relevant to an auction designer. Collapse

Semantic filters: fish market

Topics: price management anonymity IS economics economic surplus laptop computer

Methods: experiment simulation mixed-integer programming regression analysis method descriptive statistic

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A Matter of Equality: Linear Pricing in Combinatorial Exchanges

Linear payment rules for combinatorial exchanges