DP15161 Foundations of Pseudomarkets: Walrasian Equilibria for Discrete Resources
|Author(s):||Antonio Miralles, Marek Pycia|
|Publication Date:||August 2020|
|Programme Areas:||Industrial Organization|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=15161|
We study the assignment of objects in environments without transfers allowing for single-unit and general multi-unit demands, and any linear constraints, thus covering a wide range of applied environments, from school choice to course allocation. We establish the Second Welfare Theorem for these environments despite them failing the local non-satiation condition that previous studies of the Second Welfare Theorem relied on. We also prove a strong version of the First Welfare Theorem. We thus show that the link between efficiency and decentralization through prices is valid in environments without transfers, and hence provide a foundation for pseudomarket- based market design by showing that the restriction to such mechanisms is without loss of generality.