Market Equilibrium for Bundle Auctions and the Matching Core of Nonnegative TU Games

TL;DR

This paper explores the relationship between market equilibrium in bundle auctions and the matching core in nonnegative TU games, providing conditions for equilibrium existence and linking auction outcomes to game theory core concepts.

Contribution

It establishes the equivalence of market and constrained market equilibrium in multi-unit auctions and connects market equilibrium existence to the non-emptiness of the matching core in TU games.

Findings

Market equilibrium and constrained market equilibrium are equivalent in multi-unit auctions.

Necessary and sufficient conditions for the existence of market equilibrium are derived.

The non-emptiness of the matching core is characterized by the existence of a market equilibrium.

Abstract

We discuss bundle auctions within the framework of an integer allocation problem. We show that for multi-unit auctions, of which bundle auctions are a special case, market equilibrium and constrained market equilibrium are equivalent concepts. This equivalence, allows us to obtain a computable necessary and sufficient condition for the existence of constrained market equilibrium for bundle auctions. We use this result to obtain a necessary and sufficient condition for the existence of market equilibrium for multi-unit auctions. After obtaining the induced bundle auction of a nonnegative TU game, we show that the existence of market equilibrium implies the existence of a possibly different market equilibrium as well, which corresponds very naturally to an outcome in the matching core of the TU game. Consequently we show that the matching core of the nonnegative TU game is non-empty if and only if the induced market game has a market equilibrium.