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A Simple and Efficient Algorithm for Computing Market Equilibria by Lisa Fleischer; Rahul Garg; Sanjiv Kapoor; Rohit Khandekar; Amin Saberi is a Computer Science article available to read on EtoBox.

What is A Simple and Efficient Algorithm for Computing Market Equilibria about?

We give a new mathematical formulation of market equilibria in exchange economies using an indirect utility function : the function of prices and income that gives the maximum utility achievable. The formulation is a convex program and can be solved when the indirect utility function is convex in prices. We illustrate that many economies, including: —Homogeneous utilities of degree α ∈ [0, 1] in Fisher economies—this includes Linear, Leontief, Cobb-Douglas — Resource allocation utilities like multi-commodity flows satisfy this condition and can be efficiently solved. Further, we give a natural tâtonnement type price-adjusting algorithm in these economies. Our algorithm, which is applicable to a larger class of utility functions than previously known weak gross substitutes , mimics the natural dynamics for the markets as suggested by Walras: it iteratively adjusts a good’s price upward when the demand for that good under current prices exceeds its supply; and downward when its supply exceeds its demand. The algorithm computes an approximate equilibrium in a number of iterations that is independent of the number of traders and is almost linear in the number of goods.

Who reads A Simple and Efficient Algorithm for Computing Market Equilibria?

Author

Lisa Fleischer; Rahul Garg; Sanjiv Kapoor; Rohit Khandekar; Amin Saberi

Publisher

ACM

Published

2016

Language

EN

Field

Computer Science (Physical Sciences)