Implementing Fairness Constraints in Markets Using Taxes and Subsidies

TL;DR

This paper explores how taxes and subsidies can be used in Fisher markets to enforce fairness constraints, even without private valuation data, while analyzing the impact on market properties and participants.

Contribution

It introduces methods to compute fairness-enforcing taxes and subsidies in online Fisher markets, adapting existing fairness constraints and analyzing their effects.

Findings

Some fairness constraints have limited guarantees on participant welfare.

Taxes and subsidies can be computed without private valuation data.

Market properties like Pareto optimality are often preserved.

Abstract

Fisher markets are those where buyers with budgets compete for scarce items, a natural model for many real world markets including online advertising. A market equilibrium is a set of prices and allocations of items such that supply meets demand. We show how market designers can use taxes or subsidies in Fisher markets to ensure that market equilibrium outcomes fall within certain constraints. We show how these taxes and subsidies can be computed even in an online setting where the market designer does not have access to private valuations. We adapt various types of fairness constraints proposed in existing literature to the market case and show who benefits and who loses from these constraints, as well as the extent to which properties of markets including Pareto optimality, envy-freeness, and incentive compatibility are preserved. We find that some prior discussed constraints have few guarantees in terms of who is made better or worse off by their imposition.