Abstract
In a centralized combinatorial market, the market maker has a number of items for sale to potential consumers, who wish to purchase their preferred items. Different solution concepts (allocations of items to players) capture different perspectives in the market. Our focus is to balance three properties: revenue maximization from the market maker’s perspective, fairness from consumers’ perspective, and efficiency from the market’s global perspective.
Most well-known solution concepts capture only one or two properties, e.g., Walrasian equilibrium requires fairness for consumers and uses market clearance to guarantee efficiency but ignores revenue for the market maker. Revenue maximizing envy-free pricing balances market maker’s revenue and consumer’s fairness, but ignores efficiency.
In this paper, we study a solution concept, envy-free Pareto efficient pricing, that lies between Walrasian equilibrium and envy-free pricing. It requires fairness for consumers and balances efficiency and revenue. We study envy-free Pareto efficient pricing in two domains, unit-demand and single-minded consumers, and analyze its existence, computation, and economic properties.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Balcan, M., Blum, A., Mansour, Y.: Item Pricing for Revenue Maximization. In: EC 2008, pp. 50–59 (2008)
Bouveret, S., Lang, J.: Efficiency and Envy-Freeness in Fair Division of Indivisible Goods: Logical Representation and Complexity. In: IJCAI 2005, pp. 935–940 (2005)
Briest, P.: Uniform Budgets and the Envy-Free Pricing Problem. In: Aceto, L., Damgård, I., Goldberg, L.A., Halldórsson, M.M., Ingólfsdóttir, A., Walukiewicz, I. (eds.) ICALP 2008, Part I. LNCS, vol. 5125, pp. 808–819. Springer, Heidelberg (2008)
Chen, N., Deng, X., Sun, X.: On Complexity of Single-Minded Auction. Journal of Computer and System Sciences 69(4), 675–687 (2004)
Chen, N., Ghosh, A., Vassilvitskii, S.: Optimal Envy-Free Pricing with Metric Substitutability. SIAM Journal on Computing 40(3), 623–645 (2011)
Chen, X., Deng, X., Teng, S.H.: Settling the Complexity of Computing Two-Player Nash Equilibria. Journal of the ACM 56(3) (2009)
Clarke, E.H.: Multipart Pricing of Public Goods. Public Choice 11, 17–33 (1971)
Conitzer, V., Sandholm, T.: Complexity Results about Nash Equilibria. In: IJCAI 2003, pp. 765–771 (2003)
Cramton, P., Shoham, Y., Steinberg, R.: Combinatorial Auctions. MIT Press (2006)
Crawford, V., Knoer, E.: Job Matching with Heterogeneous Firms and Workers. Econometrica 49(2), 437–450 (1981)
Daskalakis, C., Goldberg, P., Papadimitriou, C.: The complexity of computing a Nash equilibrium. SIAM Journal on Computing 39(1), 195–259 (2009)
Demange, G., Gale, D.: The Strategy of Two-Sided Matching Markets. Econometrica 53, 873–888 (1985)
Groves, T.: Incentives in Teams. Econometrica 41, 617–631 (1973)
Gul, F., Stacchetti, E.: Walrasian Equilibrium with Gross Substitutes. Journal of Economic Theory 87, 95–124 (1999)
Guruswami, V., Hartline, J., Karlin, A., Kempe, D., Kenyon, C., McSherry, F.: On Profit-Maximizing Envy-Free Pricing. In: SODA 2005, pp. 1164–1173 (2005)
Kelso, A., Crawford, V.: Job Matching, Coalition Formation, and Gross Substitutes. Econometrica 50, 1483–1504 (1982)
Mas-Colell, A., Whinston, M., Green, J.: Microeconomic Theory. Oxford University Press (1995)
Pazner, E., Schmeidler, D.: A Difficulty in the Concept of Fairness. Rev. Econ. Studies 41, 441–443 (1974)
Quinzii, M.: Core and Competitive Equilibria with Indivisibilities. International Journal of Game Theory 13, 41–60 (1984)
Shapley, L., Shubik, M.: The Assignment Game I: The Core. International Journal of Game Theory 1(1), 111–130 (1971)
Varian, H.: Equity, Envy, and Efficiency. Journal of Economic Theory 9, 63–91 (1974)
Vickrey, W.: Counterspeculation, Auctions and Competitive Sealed Tenders. Journal of Finance 16, 8–37 (1961)
Walras, L.: Elements of Pure Economics, 1877. Harvard University Press (1954)
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2012 Springer-Verlag Berlin Heidelberg
About this paper
Cite this paper
Hua, X. (2012). On Envy-Free Pareto Efficient Pricing. In: Snoeyink, J., Lu, P., Su, K., Wang, L. (eds) Frontiers in Algorithmics and Algorithmic Aspects in Information and Management. Lecture Notes in Computer Science, vol 7285. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-29700-7_7
Download citation
DOI: https://doi.org/10.1007/978-3-642-29700-7_7
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-642-29699-4
Online ISBN: 978-3-642-29700-7
eBook Packages: Computer ScienceComputer Science (R0)