nep-des New Economics Papers
on Economic Design
Issue of 2021‒10‒04
six papers chosen by
Guillaume Haeringer, Baruch College and Alex Teytelboym, University of Oxford

  1. Task Allocation and On-the-job Training By Mariagiovanna Baccara; SangMok Lee; Leeat Yariv
  2. Robust Equilibria in General Competing Mechanism Games By Seungjin Han
  3. Centralized procurement and delivery times: Evidence from a natural experiment in Italy By Clark, Robert; Coviello, Decio; de Leverano, Adriano
  4. A Market Mechanism for Truthful Bidding with Energy Storage By Rajni Kant Bansal; Pengcheng You; Dennice F. Gayme; Enrique Mallada
  5. River pollution abatement: A decentralized solution through smart contracts By Jens Gudmundsson; Jens Leth Hougaard
  6. Matching Markets By Andrew Yang; Bruce Changlong Xu; Ivan Villa-Renteria

  1. By: Mariagiovanna Baccara; SangMok Lee; Leeat Yariv
    Abstract: We study dynamic task allocation when providers' expertise evolves endogenously through training. We characterize optimal assignment protocols and compare them to discretionary procedures, where it is the clients who select their service providers. Our results indicate that welfare gains from centralization are greater when tasks arrive more rapidly, and when training technologies improve. Monitoring seniors' backlog of clients always increases welfare but may decrease training. Methodologically, we explore a matching setting with endogenous types, and illustrate useful adaptations of queueing theory techniques for such environments.
    JEL: C02 C61 C78 D02 J22 L23
    Date: 2021–09
  2. By: Seungjin Han
    Abstract: This paper proposes a general competing mechanism game of incomplete information where a mechanism allows its designer to send a message to himself at the same time agents send messages. This paper introduces a notion of robust equilibrium. If each agent's payoff function is separable with respect to principals' actions, they lead to the full characterization of equilibrium allocations in terms of incentive compatible direct mechanisms without reference to the set of arbitrary mechanisms allowed in the game. Szentes' Critique (Szentes (2010)) on the standard competing mechanism game of complete information is also valid in a model with incomplete information.
    Date: 2021–09
  3. By: Clark, Robert; Coviello, Decio; de Leverano, Adriano
    Abstract: We study how delivery times and prices for hospital medical devices respond to the introduction of centralized procurement. Our identification strategy leverages a legislative change in Italy that mandated centralized purchases for a sub-set of devices. The statutory centralization generated a reduction in prices and an increase in delivery times for centralized purchases relative to non-centralized purchases. We use data on quantities and on suppliers to discuss the mechanisms potentially underlying our findings.
    Keywords: Public Procurement,Centralization,Medical Devices,Delivery Times,Bulk Purchasing
    JEL: D44 H51 H57 I18
    Date: 2021
  4. By: Rajni Kant Bansal; Pengcheng You; Dennice F. Gayme; Enrique Mallada
    Abstract: This paper proposes a storage cycle aware market mechanism for a multi-interval electricity market with generators and storage. Drawing ideas from linear supply function bidding, we propose for storage a cycle based cumulative supply function bidding form -- storage half-cycle depths as a function of cycle based prices. It allows storage to reflect their preference for cycling operations, which are directly associated with storage degradation, instead of power at each interval. The market clearing for associated economic dispatch based on bids (linear supply function for generators) yields traditional clearing prices for energy and specific clearing prices for storage cycling -- cycling prices on identified half-cycles. We show that price taking participants in such a market are all incentivized to reveal their truthful costs, thus leading to an efficient competitive equilibrium. Simulations for New York Independent System Operator (NYISO) data illustrate that linear supply function bid is insufficient to guarantee storage profitability.
    Date: 2021–09
  5. By: Jens Gudmundsson (Department of Food and Resource Economics, University of Copenhagen); Jens Leth Hougaard (Department of Food and Resource Economics, University of Copenhagen)
    Abstract: In river systems, costly upstream pollution abatement creates downstream welfare gains. Absent adequate agreement on how to share the gains, upstream regions lack incentives to reduce pollution levels. We develop a model that makes explicit the impact of water quality on production benefits and suggest a solution for sharing the gains of optimal pollution abatement, namely the Shapley value of an underlying convex cooperative game. We provide a decentralized implementation through a smart contract to automate negotiations and payments. In effect, it ensures a socially optimal agreement supported by fair compensations to regions that turn to cleaner production from those that pollute.
    Keywords: River pollution, Decentralized mechanism, Shapley value, Water quality, Smart contracts
    JEL: C7 D47 D62 Q52 Q25
    Date: 2021–09
  6. By: Andrew Yang; Bruce Changlong Xu; Ivan Villa-Renteria
    Abstract: Matching markets are of particular interest in computer science and economics literature as they are often used to model real-world phenomena where we aim to equitably distribute a limited amount of resources to multiple agents and determine these distributions efficiently. Although it has been shown that finding market clearing prices for Fisher markets with indivisible goods is NP-hard, there exist polynomial-time algorithms able to compute these prices and allocations when the goods are divisible and the utility functions are linear. We provide a promising research direction toward the development of a market that simulates buyers' preferences that vary according to the bundles of goods allocated to other buyers. Our research aims to elucidate unique ways in which the theory of matching markets can be extended to account for more complex and often counterintuitive microeconomic phenomena.
    Date: 2021–09

This nep-des issue is ©2021 by Guillaume Haeringer and Alex Teytelboym. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.