Price roll-backs and path auctions: an approximation scheme for computing the market equilibrium

  • Authors:
  • Rahul Garg;Sanjiv Kapoor

  • Affiliations:
  • IBM India Research Lab., New Delhi;Illinois Institute of Technology, Chicago

  • Venue:
  • WINE'06 Proceedings of the Second international conference on Internet and Network Economics
  • Year:
  • 2006

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Abstract

In this paper we investigate the structure of prices in approximate solutions to the market equilibrium problem. The bounds achieved allow a scaling approach for computing market equilibrium in the Fisher model. Our algorithm computes an exact solution and improves the complexity of previously known combinatorial algorithms for the problem. It consists of a price roll-back step combined with the auction steps of [11]. Our approach also leads to an efficient polynomial time approximation scheme. We also show a reduction from a flow problem to the market equlibrium problem, illustrating its inherent complexity.