2009.11.15 | Peter Bro Miltersen

Speaker: Sourav Chakraborty, Technion

Title: Market Equillibrium with Transaction Costs.

Abstract: Identical products being sold at different prices
in different locations is a common phenomenon.
Price differences might occur due to different reasons such as shipping costs, trade restrictions and price discrimination. This is modeled in traditional
market models by adding a production that transfers
the goods from one location to another. However, this approach is not always satisfactory since it would have the market determine the cost of production as well, as opposed to it being exogenously specified, and it would
unnecessarily blow up the number of goods in the market, which affects the
computational complexity of finding an equilibrium.

We give a more direct way to model such scenarios by supplementing 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 c(i,j); if the price of good j is p(j)
then the cost to the buyer i per unit of j is p(j) + c(i,j).
This allows the same good to be sold at different (effective) prices to different buyers. We study questions regarding existence, uniqueness
and computability of equilibrium in such a model.

Joint work with Chinmay Karande and Nikhil Devanur. SK: 5211