Econometrica: Nov 2013, Volume 81, Issue 6

Generalized Reduced‐Form Auctions: A Network‐Flow Approach

https://doi.org/10.3982/ECTA11405
p. 2487-2520

Yeon‐Koo Che, Jinwoo Kim, Konrad Mierendorff

We develop a network‐flow approach for characterizing interim‐allocation rules that can be implemented by ex post allocations. Our method can be used to characterize feasible interim allocations in general multi‐unit auctions where agents face capacity constraints, both ceilings and floors. Applications include a variety of settings of practical interest, ranging from individual and group‐specific capacity constraints, set‐aside sale, partnership dissolution, and government license reallocation.

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Supplemental Material

Supplement to "Generalized Reduced-Form Auctions: A Network-Flow Approach"

The supplementary material contains (A) omitted proofs, (B) two Lemmas that clarify the compliance property, (C) a discussion of the relationship with the constrained assignment model of Budish et al. (2013), and (D) explains the connection with Edmonds' polymatroid intersection theorem.

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