Journal article

Two-sided allocation problems, decomposability, and the impossibility of efficient trade

D Delacrétaz, S Loertscher, LM Marx, T Wilkening

Journal of Economic Theory | Elsevier | Published : 2019

Abstract

Previous literature has shown that private information is a transaction cost that prevents efficient reallocation in two-sided setups with bilateral trade or homogeneous goods. We derive conditions under which the impossibility of efficient trade extends to rich environments in which buyers and sellers have multi-dimensional private types, accommodating many-to-many trades and heterogeneous objects. If agents can be decomposed into unit constituents, the allocation problem can be represented as an assignment game and impossibility obtains through a generalization of Shapley's (1962) result that buyers and sellers are complements. We introduce a general family of payoff functions that ensures..

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Grants

Awarded by Australian Research Council


Funding Acknowledgements

Financial support through a 2016 Eminent Research Scholar grant from the Faculty of Business and Economics at the University of Melbourne, the Australian Research Council grant DP160101350, the Australian Research Council grant DE140101014, the Centre for Market Design, and the Samuel and June Hordern Endowment is also gratefully acknowledged.