Distribution through Repeated Market with Buying Rights

2025-05-22

AI Summary

This paper addresses core challenges in scarce-resource allocation: misaligned supply-demand dynamics, wealth-driven inequity exacerbation, and inefficiency and inflexibility of centralized allocation. To reconcile fairness and efficiency, we propose a repeated hybrid market mechanism featuring tradable purchase rights—digitally issued, stage-wise by a central authority (1 unit of right ≡ 1 unit of resource). We first formulate a multi-period game-theoretic equilibrium model and introduce “frustration degree” as a novel quantitative fairness metric. Theoretically, we prove that our mechanism reduces resource-access disparity by over 50% and yields coalition-proof equilibria. Numerical simulations under non-ideal conditions confirm its robustness: average frustration degree is halved, outperforming both free markets and static rationing across key fairness and efficiency metrics.

Technology Category

• Game Theory and Economic Paradigms: Fair Division
• Multiagent Systems: Mechanism Design
• Search and Optimization: Mixed Discrete/Continuous Search

Application Category

• Economics, Online Markets and Human Computation: Fairness, privacy, and diversity in economic environments
• User Modeling, Personalization and Recommendation: Fairness-aware retrieval and ranking
• Responsible Web: Human-perceived consequences of algorithmic deployment on the web

Abstract

Resource distribution is a fundamental problem in economic and policy design, particularly when demand and supply are not naturally aligned. Without regulation, wealthier individuals may monopolize this resource, leaving the needs of others unsatisfied. While centralized distribution can ensure fairer division, it can struggle to manage logistics efficiently, and adapt to changing conditions, often leading to shortages, surpluses, and bureaucratic inefficiencies. Building on previous research on market-based redistribution, we examine a repeated hybrid market that incorporates buying rights. These rights, distributed iteratively by a central authority (for instance, as digital tokens), are intended to enhance fairness in the system - a unit of right is required to acquire a unit of the resource, but the rights themselves can also be traded alongside the resource in the market. We analyze how this regulatory mechanism influences the distribution of the scarce resource in the hybrid market over time. Unlike past works that relied on empirical methods, we explore the exact analytical properties of a system in which traders optimize over multiple rounds. We identify its market equilibrium, which is a natural generalization of the free market equilibrium, and show that it is coalition-proof. To assess the fairness in the system, we use the concept of frustration, which measures the gap between the resources a buyer is entitled to through their buying rights and what they actually obtain through trading. Our main theoretical result shows that using buying rights reduces the frustration by at least half compared to the free market. Empirical evaluations further support our findings, suggesting the system performs well even beyond the theoretically studied assumptions.

Problem

• Fair resource distribution in misaligned supply-demand markets
• Preventing wealth monopolization via regulated buying rights
• Balancing efficiency and fairness in hybrid market systems

Innovation

• Hybrid market with tradable buying rights
• Analytical properties of multi-round optimization
• Frustration metric ensures fair resource distribution