commodities-auction

A special case of generalized English auction (Gul & Stacchetti 2000) for differentiated commodity markets.

A global market for homogeneous commodity consists of individual markets residing at different geographical locations. The markets are linked by the shared access to a finite pool of international suppliers. Suppliers differentiate price offers for distinct markets based on the trade costs. The algorithm finds the minimal Walrasian equilibrium (WE) for the matching problem in the exchange economy with indivisible objects, in which multiple objects (export supplies) are to be sold simultaneously, and each agent (market) wish to consume a bundle of different objects. Solution of the matching problem is a vector of export prices and a bundle of trade flows, or equivalently, a vector of export prices and a vector of market prices, which the program returns.

• Auction input parameters:
  - Capacity by supplier.
  - Demand by market.
  - Trade cost by supplier and market. The floor price at which supplier has an incentive to sell commodity on a market.

• Assumptions:
  - Minimal WE. Every agent is a price taker.
  - Inelastic demand. Imports can be substituted with domestic supply at higher prices.
  - Linear supply curves with identical slopes. Every supplier bears an identical constant cost of adding one more unit of commodity to market inventory (valid for international and local suppliers).
  - Cost-efficiency of domestic industry. Cost-efficiency of domestic industry is inverse proportional to the market share in global market demand.

• Equilibrium properties:
  - Capacity constraints. The sum of trade flows for any supplier does not exceed its supply capacity.
  - Utility maximization. Market customers want to maximize their payoff, which equals their valuation of the goods minus the amount of money they had to pay for the imports.
  - Market clearence. Supplier goods are unsold only if the markup over trade costs is zero.

Gul, F., & Stacchetti, E. (2000). The English Auction with Differentiated Commodities. Journal of Economic Theory, 92(1): 66-95. https://doi.org/10.1006/jeth.1999.2580

Dependency Information

To include libraries add the following to your :dependencies:

Leiningen

[org.iiasa/commodities-auction "1.0.1"]

Maven

<dependency>
  <groupId>org.iiasa</groupId>
  <artifactId>commodities-auction</artifactId>
  <version>1.0.1</version>
</dependency>

Documentation

• API docs

License

Copyright © 2020 International Institute for Applied Systems Analysis

Licensed under MIT