Browsing by Subject "Bilateral trade"

Now showing 1 - 5 of 5

Open Access
Balancing supply and demand under bilateral constraints
(Econometric Society, 2012) Bochet, O.; İlkılıç, R.; Moulin, H.; Sethuraman, J.
In a moneyless market, a nondisposable homogeneous commodity is reallocated between agents with single-peaked preferences. Agents are either suppliers or demanders. Transfers between a supplier and a demander are feasible only if they are linked. The links form an arbitrary bipartite graph. Typically, supply is short in one segment of the market, while demand is short in another. Our egalitarian transfer solution generalizes Sprumont's (1991) and Klaus et al.'s (1998) uniform allocation rules. It rations only the long side in each market segment, equalizing the net transfers of rationed agents as much as permitted by the bilateral constraints. It elicits a truthful report of both preferences and links: removing a feasible link is never profitable to either one of its two agents. Together with efficiency and a version of equal treatment of equals, these properties are characteristic.
Open Access
Essays on bilateral trade with discrete types
(2019-10) Mohammadinezhad, Kamyar Kargar
Bilateral trade is probably the most common market interaction problem and can be considered as the simplest form of two sided markets where a seller and a buyer bargain over an indivisible object subject to incomplete information on the reservation values of participants. We treat this problem as a combinatorial optimization problem and re-establish some results of economic theory that are well-known under continuous valuations assumptions for the case of discrete valuations using linear programming techniques. First, we propose mathematical formulation for the problem under dominant strategy incentive compatibility (DIC) and ex-post individual rationality (EIR) properties. Then we derive necessary and sufficient conditions under which ex-post efficiency can be obtained together with DIC and EIR. We also define a new property called Allocation Maximality and prove that the Posted Price mechanism is the only mechanism that satisfies DIC, EIR and allocation maximality. In the final part we consider ambiguity in the problem framework originating from different sets of priors for agents types and derive robust counterparts. Next, we study the bilateral trade problem with an intermediary who wants to maximize her expected gains. Using network programming we transform the initial linear program into one from which the structure of mechanism is transparent. We then relax the risk-neutrality assumption of the intermediary and consider the problem from the perspective of risk-averse intermediary. The effects of risk-averse approach are presented using computational experiments. Finally, we broaden the scope of the problem and discuss the case in which the seller is also a producer at the same time and consider benefit and cost functions for the respective parties. Starting by a non-convex optimization problem, we obtain an equivalent convex optimization problem from which the problem is solved easily. We also reconsider the same problem under dominant strategy incentive compatibility and ex-post individual rationality constraints to preserve the practicality of all obtained solutions.
Open Access
Regional transport infrastructure and trade flows in the EU
(2021-08) Özcan, Berrin
How does regional transport infrastructure affect bilateral trade flows? An extensive literature on infrastructure and trade flows has attempted to answer this question by using country level or regional data. This current thesis focuses on the European Union (EU) and investigates the effect of transport infrastructure on international and intranational trade flows using NUTS 2 (Nomenclature of Territorial Units for Statistics) level data from 200 EU regions between the years 2000-2010. It is the first study to focus on flows and infrastructure at regional level in a multi-country setting. As in the previous studies in the infrastructure literature, the gravity equation is used to explain the relationship between the regional transport infrastructure and trade in the EU. Various alternative estimation methods such as Fixed Effects, PPML, lagged variables, instrumental variables (IV) and Hausman-Taylor IV method are used in order to overcome the issues related to heteroskedasticity, reverse causality and biased estimates that are frequently encountered with gravity equation. In the presence of bilateral and time fixed effects, the results suggest an increase of 0.05 to 0.13 per cent bilateral trade as infrastructure measures increase by 1 per cent. The robustness check follows that the estimates are not sensitive to the choice of unit of measure for the infrastructure variables.
Open Access
Robust trading mechanisms over 0/1 polytopes
(Springer New York LLC, 2018) Pınar, Mustafa Çelebi
The problem of designing a trade mechanism (for an indivisible good) between a seller and a buyer is studied in the setting of discrete valuations of both parties using tools of finite-dimensional optimization. A robust trade design is defined as one which allows both traders a dominant strategy implementation independent of other traders’ valuations with participation incentive and no intermediary (i.e., under budget balance). The design problem which is initially formulated as a mixed-integer non-linear non-convex feasibility problem is transformed into a linear integer feasibility problem by duality arguments, and its explicit solution corresponding to posted price optimal mechanisms is derived along with full characterization of the convex hull of integer solutions. A further robustness concept is then introduced for a central planner unsure about the buyer or seller valuation distribution, a corresponding worst-case design problem over a set of possible distributions is formulated as an integer linear programming problem, and a polynomial solution procedure is given. When budget balance requirement is relaxed to feasibility only, i.e., when one allows an intermediary maximizing the expected surplus from trade, a characterization of the optimal robust trade as the solution of a simple linear program is given. A modified VCG mechanism turns out to be optimal.
Open Access
Turkey’s strategic trade policy alternatives in a world of multi-polar trade blocs: lessons from an intertemporal, multi-region general equilibrium model
(Kluwer Academic Publishers, 2001) Diao, Xinshen; Yeldan, A. Erinç; Von Hagen, J.; Widgren, M.
Turkey has initiated its process of liberalization and integration with the world commodity and financial markets in January, 1980. With an over-reaching reform agenda, first the existing system of multiple exchange system was eliminated and a managed floating foreign exchange regime was enacted. An extensive direct subsidization scheme was introduced to promote exports. In the meantime, commodity markets were liberalized and a vigorous price reform was implemented.