Market Equilibrium with Transaction Costs

الأصل · EN

Identical products being sold at different prices in different locations is a common phenomenon. Price differences might occur due to various reasons such as shipping costs, trade restrictions and price discrimination. To model such scenarios, we supplement the classical Fisher model of a market by introducing transaction costs. For every buyer i and every good j, there is a transaction cost of; if the price of good j is pⱼ, then the cost to the buyer i per unit of j is pⱼ +. This allows the same good to be sold at different (effective) prices to different buyers. We provide a combinatorial algorithm that computes ε-approximate equilibrium prices and allocations in O(1ε(n+m)mn(B/ε)) operations - where m is the number goods, n is the number of buyers and B is the sum of the budgets of all the buyers.