On computability of equilibria in markets with production

Jugal Garg, Vijay V. Vazirani

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

Even though production is an integral part of the Arrow- Debreu market model, most of the work in theoretical computer science has so far concentrated on markets without production, i.e., the exchange economy. This paper takes a significant step towards understanding computational aspects of markets with production. For markets with separable, piecewise-linear concave (SPLC) utilities and SPLC production, we obtain a linear complementarity problem (LCP) formulation that captures exactly the set of equilibria, and we further give a complementary pivot algorithm for finding an equilibrium. This settles a question asked by Eaves in 1975 [14]. Since this is a path-following algorithm, we obtain a proof of membership of this problem in PPAD, using Todd, 1976. We also obtain an elementary proof of existence of equilibrium (i.e., without using a fixed point theorem), rationality, and odd- ness of the number of equilibria. We further give a proof of PPAD-hardness for this problem and also for its restriction to markets with linear utilities and SPLC production. Experiments show that our algorithm is practical. Also, it is strongly polynomial when the number of goods or the number of agents and firms is constant. This extends the result of Devanur and Kannan (2008) to markets with production. Finally, we show that an LCP-based approach cannot be extended to PLC (non-separable) production, by constructing an example which has only irrational equilibria.

Original languageEnglish (US)
Title of host publicationProceedings of the 25th Annual ACM-SIAM Symposium on Discrete Algorithms, SODA 2014
PublisherAssociation for Computing Machinery
Pages1329-1340
Number of pages12
ISBN (Print)9781611973389
DOIs
StatePublished - 2014
Externally publishedYes
Event25th Annual ACM-SIAM Symposium on Discrete Algorithms, SODA 2014 - Portland, OR, United States
Duration: Jan 5 2014Jan 7 2014

Publication series

NameProceedings of the Annual ACM-SIAM Symposium on Discrete Algorithms

Other

Other25th Annual ACM-SIAM Symposium on Discrete Algorithms, SODA 2014
Country/TerritoryUnited States
CityPortland, OR
Period1/5/141/7/14

ASJC Scopus subject areas

  • Software
  • General Mathematics

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