Computing fair market prices with fees taxes and subsidies included
Finding Competitive Equilibria in Online Marketplaces with Platform Fees, Taxes, and Subsidies
Computer Science and Game Theory
Summary
This paper addresses how online markets involving many buyers and sellers can find fair and balanced prices when fees, taxes, and discounts affect transactions. The authors develop a step-by-step method that adjusts prices in a smart way to quickly find the lowest prices where supply meets demand, even when purchases and sales depend on each other. Their approach also allows marketplaces with complex rules about fees to still find stable deals efficiently. This helps online platforms better manage pricing when extra costs or incentives are involved.
What this means in practice
- •For online marketplace operators: Calculate stable price points accounting for platform fees and subsidies to optimize trade between buyers and sellers.$Commercial implications: Enables development of pricing engines that incorporate complex fees and incentives improving marketplace efficiency and revenue.
- •For auction platform designers: Design auction mechanisms that handle bidder-specific fees and discounts while ensuring fair and efficient outcomes.
Authors
Taihei Oki, Ryosuke Sato
Abstract
We study equilibrium computation in multi-unit trading networks with valuations satisfying generalized full substitutes and agent- and transaction-specific piecewise-linear transfer functions. These transfers model platform fees, taxes, subsidies, and membership discounts in online marketplaces. Our ascending procedure raises prices at different rates and reaches the minimum equilibrium price vector in finitely many iterations, each implementable in strongly polynomial time under our oracle and arithmetic models. An equilibrium allocation can then be recovered efficiently. The method extends primal-dual techniques developed for ascending auctions to handle complementarities between purchases and sales through a submodular flow formulation. In single-seller markets with substitutes and complements, our framework also extends the double-track auctions of Sun and Yang (2009) and Shioura and Yang (2015) to bidder- and good-specific transfers.