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Exchange Market Equilibria with Leontief’s Utility: Freedom of Pricing Leads to Rationality

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Internet and Network Economics (WINE 2005)

Part of the book series: Lecture Notes in Computer Science ((LNISA,volume 3828))

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Abstract

This paper studies the equilibrium property and algorithmic complexity of the exchange market equilibrium problem with more general utility functions: piece-wise linear functions, which include Leontief’s utility functions. We show that the Fisher model again reduces to the general analytic center problem, and the same linear programming complexity bound applies to approximating its equilibrium. However, the story for the Arrow-Debreu model with Leontief’s utility becomes quite different. We show that, for the first time, that solving this class of Leontief exchange economies is equivalent to solving a known linear complementarity problem whose algorithmic complexity status remains open.

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Authors and Affiliations

  1. Stanford University, Stanford, CA, 94305, USA

    Yinyu Ye

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  1. Yinyu Ye
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Editors and Affiliations

  1. Department of Computer Science, City University of Hong Kong, Tat Chee Avenue, Kowloon ,, Hong Kong

    Xiaotie Deng

  2. Stanford University, Stanford, CA

    Yinyu Ye

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Ye, Y. (2005). Exchange Market Equilibria with Leontief’s Utility: Freedom of Pricing Leads to Rationality. In: Deng, X., Ye, Y. (eds) Internet and Network Economics. WINE 2005. Lecture Notes in Computer Science, vol 3828. Springer, Berlin, Heidelberg. https://doi.org/10.1007/11600930_3

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  • DOI: https://doi.org/10.1007/11600930_3

  • Publisher Name: Springer, Berlin, Heidelberg

  • Print ISBN: 978-3-540-30900-0

  • Online ISBN: 978-3-540-32293-1

  • eBook Packages: Computer ScienceComputer Science (R0)

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