TY - JOUR
T1 - Note on the applicability of the VCG mechanism to capacitated assignment problems and extensions
AU - Lok, R.B.
AU - Romero Morales, M.D.
AU - Vermeulen, A.J.
PY - 2007/1/1
Y1 - 2007/1/1
N2 - For the allocation of heterogeneous items, it is known that the buyers-are-substitutes condition is necessary and sufficient to ensure that a pricing equilibrium can yield the same allocation and payments as the vcg mechanism. Furthermore, concavity of the corresponding transferable utility tu-game guarantees that this vcg outcome can also be achieved by an ascending price auction. We show that concavity, and hence the buyers-are-substitutes condition, holds for the tu-game of the assignment problem with general capacities. Therefore, the vcg mechanism is supported by a pricing equilibrium which can also be achieved by an ascending auction. We also show that the buyers-are-substitutes condition, and hence concavity, does not hold anymore for very natural and straightforward extensions of this problem. This shows that the necessity of the substitutes property is a considerable restriction on the applicability of the vcg mechanism.
AB - For the allocation of heterogeneous items, it is known that the buyers-are-substitutes condition is necessary and sufficient to ensure that a pricing equilibrium can yield the same allocation and payments as the vcg mechanism. Furthermore, concavity of the corresponding transferable utility tu-game guarantees that this vcg outcome can also be achieved by an ascending price auction. We show that concavity, and hence the buyers-are-substitutes condition, holds for the tu-game of the assignment problem with general capacities. Therefore, the vcg mechanism is supported by a pricing equilibrium which can also be achieved by an ascending auction. We also show that the buyers-are-substitutes condition, and hence concavity, does not hold anymore for very natural and straightforward extensions of this problem. This shows that the necessity of the substitutes property is a considerable restriction on the applicability of the vcg mechanism.
U2 - 10.1111/j.1467-9574.2007.00356.x
DO - 10.1111/j.1467-9574.2007.00356.x
M3 - Article
SN - 0039-0402
VL - 61
SP - 156
EP - 171
JO - Statistica Neerlandica
JF - Statistica Neerlandica
ER -