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extended-abstract

Ex-Post Equilibrium Market Recommendations

Published: 17 December 2024 Publication History

Abstract

New business models help sellers make better decisions by communicating information about market prices. However, sellers' inability to coordinate greatly reduces the efficacy of this information and can lead to market failures. We study the feasibility and benefits of providing equilibria as recommendations in economies where sellers face price uncertainty, information scarcity, and an inability to coordinate.
We describe a general model in which sellers wish to sell some quantity of a good at one of several markets with elastic prices, and show that while an equilibrium may not necessarily exist, an approximate equilibrium always exists under mild assumptions on the market concentration. We describe an algorithm that a market planner can use to recommend approximate ex-post equilibria to sellers, and compare the recommended (approximate) equilibria to selling strategies identified from a survey of onion and potato farmers in India. Using both synthetic data and real data on India's agricultural markets, we show that the recommended strategy outperforms the other strategies in terms of seller welfare, geographic price dispersion, market volume concentration, and several metrics of individual farmer welfare improvements. We also show that the framework is robust to imperfect market penetration, is fair to smaller farmers, and captures nearly all of the welfare from a welfare-maximizing allocation.

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cover image ACM Conferences
EC '24: Proceedings of the 25th ACM Conference on Economics and Computation
July 2024
1340 pages
ISBN:9798400707049
DOI:10.1145/3670865
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Association for Computing Machinery

New York, NY, United States

Publication History

Published: 17 December 2024

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Author Tags

  1. mechanism design
  2. electronic commerce

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EC '24
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Overall Acceptance Rate 664 of 2,389 submissions, 28%

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