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on Economic Design |
| By: | Scott Duke Kominers (Harvard Business School Harvard University; Harvard Business Becker Friedman Institute for Research in Economics University of Chicago; Department of Economics Harvard University); Piotr Dworczak (Northwestern University; Group for Research in Applied Economics (GRAPE)) |
| Abstract: | We propose an economic definition of price gouging: Price gouging occurs in a competitive market when lowering the price from the market-clearing level would increase total Utilitarian welfare. We then use price-theoretic tools to characterize determinants of price gouging in a setting with income heterogeneity and non-quasi-linear preferences that induce a motive to redistribute across agents. The circumstances under which price gouging occurs in our framework align with the contexts covered by existing anti‒price gouging laws. By proposing a definition of price gouging that does not appeal to any non-economic notions of (un)fairness or excess, we hope to provide a pathway for follow-up theoretical and empirical research. |
| Keywords: | price gouging, price control, market design |
| JEL: | D47 D63 D82 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:fme:wpaper:104 |
| By: | Minoru Kitahara; Yasunori Okumura |
| Abstract: | We examine a controlled school choice model where students are categorized into different types, and the distribution of these types within a school influences its priority structure. This study provides a general framework that integrates existing controlled school choice models, including those utilizing reserve rules, quota rules, and bonus-point rules. Specifically, we introduce an adjusted scoring rule that unifies these rules. By achieving a matching that satisfies the stability defined in this framework, matching authorities can effectively manage the trade-offs inherent in controlled school choice markets. Moreover, the priority order for a school is represented as a weak order with each given assignment, meaning that ties are allowed. Our mechanism ensures a stable matching and satisfies strategy-proofness. In particular, when priority orders are restricted to linear orders with each given assignment, our mechanism guarantees student-optimal stability. |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2503.18220 |
| By: | Christopher En; Yuri Faenza |
| Abstract: | We show that all finite lattices, including non-distributive lattices, arise as stable matching lattices under standard assumptions on choice functions. In the process, we introduce new tools to reason on general lattices for optimization purposes: the partial representation of a lattice, which partially extends Birkhoff's representation theorem to non-distributive lattices; the distributive closure of a lattice, which gives such a partial representation; and join constraints, which can be added to the distributive closure to obtain a representation for the original lattice. Then, we use these techniques to show that the minimum cost stable matching problem under the same standard assumptions on choice functions is NP-hard, by establishing a connection with antimatroid theory. |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2504.17916 |
| By: | Pawel‚ Doligalski (Group for Research in Applied Economics (GRAPE); Bristol University); Piotr Dworczak (Northwestern University; Group for Research in Applied Economics (GRAPE)); Mohammad Akbarpour (Stanford University); Scott Duke Kominers (Harvard Business School Harvard University; Harvard Business Becker Friedman Institute for Research in Economics University of Chicago; Department of Economics Harvard University) |
| Abstract: | Policymakers often intervene in goods markets to effect redistribution---for example, via price controls, differential taxation, or in-kind transfers. We investigate the optimality of such policies alongside the (optimally-designed) income tax. In our framework, agents possess private information about their ability to generate income and consumption preferences, and a planner maximizes a social welfare function subject to resource constraints. We uncover a generalization of the Atkinson-Stiglitz theorem by showing that goods markets should be undistorted if (i) individual utility functions feature no income effects, (ii) redistributive preferences depend only on agents’ ability, and (iii) there is no statistical correlation between ability and taste for goods. We also show, however, that the conclusion of the Atkinson-Stiglitz theorem fails if any of the three assumptions is relaxed. In a special case of our model with linear utilities, binary ability, and continuous willingness to pay for a single good, we characterize the globally optimal mechanism and show that it may feature means-tested consumption subsidies, in-kind transfers, and differential commodity taxation. |
| Keywords: | membership, allocative externalities, pricing tiers, rationing |
| JEL: | D47 D82 H21 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:fme:wpaper:103 |
| By: | Junjie Chen; Takuro Yamashita |
| Abstract: | An information broker incentivizes consumers to share their information, while designing an information structure to shape the market segmentation. The information broker is a metaphor for an Internet platform that matches consumers with retailers. We are interested in a market with heterogeneous retailers and heterogeneous consumers. The optimal broking mechanism consists of a simple threshold-based structure where consumers with strong preferences are assigned to the efficient retailer while consumers with weaker preferences are assigned to the inefficient retailer stochastically. Our analysis suggests that the privacy protection policy may have a stronger impact on less competitive retail markets. |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2503.19539 |
| By: | Cole Wittbrodt |
| Abstract: | Search and matching increasingly takes place on online platforms. These platforms have elements of centralized and decentralized matching; platforms can alter the search process for its users, but are unable to eliminate search frictions entirely. I study a model where platforms can change the distribution of potential partners that an agent searches over and characterize search equilibria on platforms. When agents possess private information about their match characteristics and the platform designer acts as a profit maximizing monopolist, I characterize the optimal platform. If match characteristics are complementary and utility is transferable, I show that the solution to this screening problem is efficient, despite the presence of hidden information and market power. Matching under the optimal platform is perfectly assortative -- there is no equilibrium mismatch. |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2505.00205 |
| By: | Paulo Santos (Economics, Monash University.); Benjamin Chipperfield (Economics, Monash University.); Shipra Shah (Forestry, Fiji National University) |
| Abstract: | REDD+ is a promising mechanism for financing carbon sequestration, but limited research exists on the contract designs that maximise this outcome. We estimate the supply of carbon under different agroforestry contracts using primary data collected in Fiji through procurement auctions, artefactual experiments, and household surveys. Our findings indicate that the densest and longest-duration contract offers the most cost-effective opportunities for carbon sequestration. We contrast auctions with contracts defined on the basis of important drivers of bidding decisions (identified using regression trees), under different assumptions of variables that can be used to administratively target beneficiaries. Our analysis shows that for relatively high values of carbon sequestration, auctions outperform such targeted payments, supporting their use for implementing REDD+ in Fiji. |
| Keywords: | agroforestry, auction, REDD+, Fiji |
| JEL: | Q23 D44 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:mos:moswps:2025-07 |