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Energy geography has not scrutinized the role of energy infrastructures and market design for decentralized energy production and local development. The paper addresses this research gap by looking at the emerging green‐hydrogen market in Germany. We argue, first, that the capacity and geography of infrastructures and associated bottlenecks determine how supply and demand can be matched at different scales. Second, market design and associated controversies over infrastructure bottlenecks are important for understanding the green‐hydrogen market and its geography and financing. Conceptually, we draw on the geography‐of‐markets literature. Empirically, we show how infrastructure bottlenecks and market design link the green‐hydrogen to the renewable‐electricity market. As long as the market design requires green‐hydrogen production in geographical and temporal correlation with renewable‐electricity generation, the geography of green‐hydrogen production follows the geography of renewable‐electricity generation. Moreover, bottlenecks in transportation infrastructures offer a window of opportunity for decentralized production and local development. [ABSTRACT FROM AUTHOR]

This paper explores "price gouging" in oligopolistic industries. Drawing from Australian examples, it illustrates how determining who is responsible for market power‐related inefficiencies—whether from consumer or producer behaviour—is fundamental to defining and identifying price gouging. I then discuss how recent competition policy reforms in Australia and global changes in data availability and artificial intelligence shape firms' willingness and ability to price gouge. I close by discussing the future role of government in enabling pro‐competitive pricing in our increasingly digital economy through information aggregation and market design. [ABSTRACT FROM AUTHOR]

Matching models with contracts have been extensively studied in the last years as a generalization of the classical matching theory. Matching in networks is an even more general model in which firms trade goods via bilateral contracts constituting a supply chain. Hatfield and Kominers ([2012] Matching in networks with bilateral contracts, Am. Econ. J., Microecon. 4(1), 176–208, doi:10.1257/mic.4.1.176) showed that a natural substitutability condition characterizes the maximal domain of firm preferences for which the existence of stable allocations is guaranteed in such a model, if the set of all existent contracts is acyclic. Moreover, they asserted that these conditions are sufficient to obtain a suitable lattice structure for the set of all stable allocations. In this paper, we exhibit an inconsistency in the last point through an example, and introduce an additional condition over firm preferences that allows to recover an appropriate lattice structure. [ABSTRACT FROM AUTHOR]

We study a mechanism that gives students the option of paying higher tuition to attend their preferred schools. This seat‐purchasing mechanism is neither strategyproof nor stable. Our paper combines administrative and survey data to estimate students' preferences and conducts welfare analysis. We find that changing from a deferred acceptance mechanism to the cadet‐optimal stable mechanism reduces students' welfare but that adopting the observed seat‐purchasing mechanism alleviates this welfare loss. Moreover, students from affluent communities prefer to pay higher tuition to stay at preferred schools, while those from less affluent communities are more likely be priced out to lower‐quality schools. [ABSTRACT FROM AUTHOR]

This paper revisits the descending clock "reverse" auction design used in the U.S. Federal Communications Commission's 2016–2017 "incentive auction." We use extensive computational simulations to investigate the quantitative significance of various aspects of the design, leveraging a reverse auction simulator and realistic models of bidder values. This paper was accepted by Gabriel Weintraub, revenue management and market analytics. Funding: This work was supported by the Defense Advanced Research Projects Agency [Grant FA8750-19-2-0222 CFDA\# 12.910], the Canadian Institute for Advanced Research [Canada AI Research Chair at the Alberta Machine In], the National Science Foundation [Grant 1525730], and the Canadian Network for Research and Innovation in Machining Technology, Natural Sciences and Engineering Research Council of Canada [Discovery Grant, Discovery Grant Supplement]. Supplemental Material: The data files are available at https://doi.org/10.1287/mnsc.2020.02489. [ABSTRACT FROM AUTHOR]

Once autonomous vehicles (AVs) are deployed for ride-hailing platforms, human drivers will compete with AVs until AV costs decrease enough to eliminate human drivers entirely. We examine a ride-hailing platform's strategy to recruit human drivers while operating a private AV fleet. Using a game-theoretic model, we analyze how the platform sets the human-driver wage and the size of its AV fleet. We show that setting a higher wage can surprisingly lead to less human-driver participation. Moreover, we show that having the option to augment its AV fleet after observing human participation levels can, counterintuitively, hurt the platform's bottom line. Our findings emphasize the need for ride-hailing platforms to carefully navigate the complex interactions between their roles as supply providers (of AV-served rides) and supply seekers (of human drivers), as failure to do so can be costly. [ABSTRACT FROM AUTHOR]

Abstract A decarbonised future grid should couple technological novelty with innovative market models to efficiently capture the value of grid‐edge decarbonised assets. The transactive energy (TE) concept inverts the centralised grid model by leveraging the evolution of consumers to prosumers to prosumagers. The principal TE market design challenge is transactive control—using market and pricing mechanisms to coordinate autonomous peer interactions, to optimally allocate power and incentivise peers. Peer attraction, incentivisation and retention are all critical for practical TE implementation along three adoption stages, starting from independent peer transactions with the centralised market; to decentralised peer coordination; towards distributed peer‐to‐peer trading. Addressing gaps in related scholarship, the authors investigate the economic positions of distinct peer roles in each adoption stage and two local pricing strategies. Using a real market dataset, trading decisions are simulated over a 1‐year horizon at hourly granularity. Coordinated action achieves better transactive control for the community, with economic superiority over centralised and distributed mechanisms. Distinct peer incentives should equitably align with their contribution to market functionality, such as the value ascribed to prosumagers' flexibility in local pricing and the constrained bargaining power of prosumers in distributed bilateral negotiations.

The Chinese stock market has a threefold segmented structure. Firstly, there is a division between floatable and nonfloatable shares, known as the split‐share structure. Before 2005, more than two‐thirds of the shares outstanding were nonfloatable. This structure limited shareholders' ability to exercise governance rights through stock trading. While largely dismantled by the 2005 reform, the split‐share structure has not been fully eliminated. Secondly, floatable shares can be issued in multiple currencies. However, shares denominated in the domestic currency often trade at a premium over those denominated in foreign currencies. This premium can be explained by the differences in target investors and the trading restrictions. Thirdly, stocks denominated in the domestic currency are sorted into different market tiers depending on the firms' profitability and market capitalization. The limited mobility of stocks across different tiers engenders tier‐specific characteristics, such as high family ownership and venture‐capital backing, which have not been sufficiently studied. In this paper, we delineate the three aspects of market segmentation, offer critical comments on the caveats of the extant studies, and propose topics for future research. [ABSTRACT FROM AUTHOR]

This study considers a hypothetical global pediatric vaccine market where multiple coordinating entities make optimal procurement decisions on behalf of countries with different purchasing power. Each entity aims to improve affordability for its countries while maintaining a profitable market for vaccine producers. This study analyzes the effect of several factors on affordability and profitability, including the number of non-cooperative coordinating entities making procuring decisions, the number of market segments in which countries are grouped for tiered pricing purposes, how producers recover fixed production costs, and the procuring order of the coordinating entities. The study relies on a framework where entities negotiate sequentially with vaccine producers using a three-stage optimization process that solves a MIP and two LP problems to determine the optimal procurement plans and prices per dose that maximize savings for the entities' countries and profit for the vaccine producers. The study's results challenge current vaccine market dynamics and contribute novel alternative strategies to orchestrate the interaction of buyers, producers, and coordinating entities for enhancing affordability in a non-cooperative market. Key results show that the order in which the coordinating entities negotiate with vaccine producers and how the latter recuperate their fixed cost investments can significantly affect profitability and affordability. Furthermore, low-income countries can meet their demands more affordably by procuring vaccines through tiered pricing via entities coordinating many market segments. In contrast, upper-middle and high-income countries increase their affordability by procuring through entities with fewer and more extensive market segments. A procurement order that prioritizes entities based on the descending income level of their countries offers higher opportunities to increase affordability and profit when producers offer volume discounts. [ABSTRACT FROM AUTHOR]

Platform companies use techniques of algorithmic management to control their users. Though digital marketplaces vary in their use of these techniques, few studies have asked why. This question is theoretically consequential. Economic sociology has traditionally focused on the embedded activities of market actors to explain competitive and valuation dynamics in markets. But restrictive platforms can leave little autonomy to market actors. Whether or not the analytical focus on their interactions makes sense thus depends on how restrictive the platform is, turning the question into a first order analytical concern. The paper argues that we can explain why platforms adopt more and less restrictive architectures by focusing on the design logic that informs their construction. Platforms treat markets as search algorithms that blend software computation with human interactions. If the algorithm requires actors to follow narrow scripts of behavior, the platform should become more restrictive. This depends on the need for centralized computation, the degree to which required inputs can be standardized, and the misalignment of interests between users. The paper discusses how these criteria can be mobilized to explain the architectures of four illustrative cases. [ABSTRACT FROM AUTHOR]

Using prices induced by dual variables of a centralized optimization problem induces welfare-optimal equilibria among strategic drivers. We reveal a stark deficiency of such static pricing algorithms: it is possible for them to induce additional equilibria with arbitrarily low social welfare. Moreover, small perturbations to the marketplace, such as those caused by idiosyncratic randomness or model misspecification, can cause the welfare-optimal equilibrium to be Pareto-dominated (in terms of driver utility) by suboptimal equilibria. We show that dynamic pricing solves this problem. We describe a dynamic pricing algorithm that resolves the centralized optimization problem in each time period and show that it satisfies a new equilibrium robustness property, which guarantees that every induced (approximate) equilibrium is (approximately) welfare optimal. We also propose a novel two-level model of ridesharing networks with strategic drivers and spatiotemporal dynamics that lets us retain macroscopic uncertainty, such as correlated shocks caused by weather or other public events, when analyzing a large market limit in which idiosyncratic sources of uncertainty vanish. Funding: J. M. Cashore was supported by an NSERC PGS D Fellowship. P. Frazier was supported by AFOSR [Grant FA9550-19-1-0283]. É. Tardos was supported by AFOSR [Grant FA9550-19-1-0183] and [NSF Grants CCF-1408673 and CCF-1563714]. Supplemental Material: The online companion is available at https://doi.org/10.1287/moor.2022.0163. [ABSTRACT FROM AUTHOR]

Offshore grids, with multiple interacting transmission and generation units connecting to the shores of several countries, are expected to have an important role in the cost-effective energy transition. Such massive new infrastructure expanding into a new physical space will require new offshore energy market designs. Decisions on these designs today will influence the overall value potential of offshore grids in the future. This paper investigates different possible market configurations and their impacts on operational costs and required congestion management, as well as prices and emissions. We use advanced integrated energy system optimisation, applied to a study case on the North Sea region towards 2050. Our analysis confirms the well-known concept of nodal pricing as the most preferable market configuration. Nodal pricing minimises costs (0.2–1.6 b€/year lower) and CO2 emissions (0.6–5.6 Mton/year lower) with respect to alternative market designs investigated. The performance of the different market designs is highly influenced by the overall architecture of the offshore grid, and the rest of the energy system. E.g., flexibility options help reducing the spread between the designs. But the results are robust: nodal pricing in offshore grids emerges as the preferable market configuration for a cost-effective energy transition to carbon neutrality. [ABSTRACT FROM AUTHOR]

We consider the generalization of the classical Shapley and Scarf housing market model (Shapley and Scarf, 1974) to so-called multiple-type housing markets (Moulin, 1995). Throughout the paper, we focus on strict preferences. When preferences are separable, the prominent solution for these markets is the typewise top-trading-cycles (tTTC) mechanism. We first show that for lexicographic preferences, a mechanism is unanimous (or onto), individually rational , strategy-proof , and non-bossy if and only if it is the tTTC mechanism. Second, we obtain a corresponding characterization for separable preferences. We obtain additional characterizations when replacing [ strategy-proofness and non-bossiness ] with self-enforcing group (or pairwise) strategy-proofness. Finally, we show that for strict preferences, there is no mechanism satisfying unanimity , individual rationality , and strategy-proofness. Our characterizations of the tTTC mechanism constitute the first characterizations of an extension of the prominent top-trading-cycles (TTC) mechanism to multiple-type housing markets. [ABSTRACT FROM AUTHOR]

We introduce a new family of mechanisms for one-sided matching markets, denoted pick-an-object (PAO) mechanisms. When implementing an allocation rule via PAO, agents are asked to pick an object from individualized menus. These choices may be rejected later on, and these agents are presented with new menus. When the procedure ends, agents are assigned the last object they picked. We characterize the allocation rules that can be sequentialized by PAO mechanisms and the ones that can be implemented in a robust truthful equilibrium. We justify the use of PAO as opposed to direct mechanisms by showing that its equilibrium behavior is closely related to the one in obviously strategy-proof (OSP) mechanisms, but implements commonly used rules, such as Gale-Shapley DA and top trading cycles, which are not OSP implementable. We run laboratory experiments comparing truthful behavior when using PAO, OSP, and direct mechanisms to implement different rules. These indicate that agents are more likely to behave in line with the theoretical prediction under PAO and OSP implementations than their direct counterparts. This paper was accepted by Yan Chen, behavioral economics and decision analysis. Funding: This research is funded by the National Natural Science Foundation of China [Grant 72033006]. R. Hakimov was supported by the Schweizerischer Nationalfonds zur Förderung der Wissenschaftlichen Forschung [Project 100018_189152]. Supplemental Material: The data files are available at https://doi.org/10.1287/mnsc.2023.4908. [ABSTRACT FROM AUTHOR]

A key building block of the European Green Deal is the development of a hydrogen commodity market, which requires a suitable hydrogen market design and the timely introduction of related policy measures. Using exploratory interviews with five expert groups, we contribute to this novel research field by outlining the core market design criteria and proposing suitable regulations for the future European hydrogen market. We identify detailed recommendations along three core market design focus areas: Market development policy measures, infrastructure regulations, as well as hydrogen and certificate trading. Our findings provide an across-industry view of current policy-related key challenges in the hydrogen commodity market development and mitigation approaches. We, therefore, support policymakers within the EU in the ongoing detailing of their regulatory hydrogen and green energy packages. Further, we promote hydrogen market development by assisting current and future industry players in finding a common understanding of the future hydrogen market design. • Regulatory uncertainty slows the development of a European hydrogen commodity market. • We use expert interviews to evaluate crucial market design choices and regulations. • All key value chain stakeholders are included to provide an across-industry view. • We propose measures for market development, infrastructure regulations, and trading. • We discuss critical policy-related challenges and mitigation approaches. [ABSTRACT FROM AUTHOR]

Economic sociologists have long recognized that markets have moral dimensions, but we know less about how everyday moral categories like fairness are reconciled with competing market principles like efficiency, especially in novel settings combining market design and algorithmic technologies. Here we explore this tension in the context of education, examining the use of algorithms alongside school choice policies. In US urban school districts, market design economists and computer scientists have applied matching algorithms to build unified enrollment (UE) systems. Despite promising to make school choice both fair and efficient, these algorithms have become contested. Why is it that algorithmic technologies intended to simplify enrollment and create a fairer application process can instead contribute to the perception they are reproducing inequality? Analyzing narratives about the UE system in New Orleans, Louisiana, USA, we show that experts designing and implementing algorithm-based enrollment understand fairness differently from the education activists and families who use and question these systems. Whereas the former interpret fairness in narrow, procedural, and ahistorical terms, the latter tend to evaluate fairness with consequentialist reasoning, using broader conceptions of justice rooted in addressing socioeconomic and racial inequality in Louisiana, and unfulfilled promises of universal access to quality schools. Considering the diffusion of "economic styles of reasoning" across local public education bureaucracies, we reveal how school choice algorithms risk becoming imbued with incommensurable meanings about fairness and justice, compromising public trust and legitimacy. The study is based on thirty interviews with key stakeholders in the school district's education policy field, government documents, and local media sources. [ABSTRACT FROM AUTHOR]

Can private jets help save lives? Yes. Can short videos nudge next‐of‐kin to donate more? Also, yes. How has an outsider to the transplantation system, with no previous knowledge or expertise in (any aspect of) healthcare, managed to make a difference? Is imagination really more important than knowledge? In this invited article, I will briefly describe two innovations—OrganJet and Nudge Videos—that I have implemented in the US Transplantation System that have extended the lives of many. [ABSTRACT FROM AUTHOR]

We introduce a new matching design for financial transactions in an electronic market. In this mechanism, called ad hoc electronic auction design (AHEAD), market participants can trade between themselves at a fixed price and trigger an auction when they are no longer satisfied with this fixed price. In this context, we prove that a Nash equilibrium is obtained between market participants. Furthermore, we are able to assess quantitatively the relevance of ad hoc auctions and to compare them with periodic auctions and continuous limit order books. We show that from the investors' viewpoint, the microstructure of the asset is usually significantly improved when using AHEAD. [ABSTRACT FROM AUTHOR]

We analyze the allocation of face masks to minimize mortality during a pandemic through airborne transmission. When the initial distribution of masks is private information, the optimal allocation achieved by a sophisticated mechanism in most cases maximizes the coverage rate by incentivizing individuals who initially own a mask to reveal this information in exchange for a better chance to receive masks in the future. We propose a novel and simple mechanism, which reduces death by a sizable number compared with simple random assignment. Our simulation shows that, for low to medium early coverage rates, the new mechanism approximately attains the minimum mortality. [ABSTRACT FROM AUTHOR]

We study the assignment of an object with multiple copies where various numbers can be reserved for some types of individuals. We focus on the reserve system's ability to increase the representation of a targeted type. We consider a general setting that covers many features considered in the recent literature; in particular, an individual can belong to more than one type and the priorities of individuals may differ across reserved copies. We show how a precedence order can be modified to increase the representation of the targeted type. • There are ways to influence reserve system allocations beyond reservation numbers. • The precedence order in which objects are processed may affect types differently. • We show how to modify such orders to increase representation of a targeted type. • Agents can have multiple types, and type connectedness is critical in the analysis. [ABSTRACT FROM AUTHOR]

Purpose: The purpose of this paper is to examine how active consumers, i.e. consumers that can inter-temporally shift their load, can influence electricity prices. As demonstrated in this paper, inter-temporal load shifting can induce negative electricity prices, a recurring phenomenon on power exchanges. Design/methodology/approach: The paper presents a novel electricity-market model assuming a nodal-pricing, energy-only spot market with active consumers. This study formulates an economic equilibrium problem as a linear program and uses an established six-node case study to compare equilibrium prices of a model with inflexible demand to a model with flexible demand of active consumers. Findings: This study illustrates that temporal coupling of hourly market clearing through load shifting of active consumers can cause negative electricity prices that are not observed in a model with ceteris paribus inflexible demand. In such situations, where compared to the case of inflexible demand more flexibility is available in the system, negative electricity prices signal lower total system costs. These negative prices result from the use of demand flexibility, which, however, cannot be fully exploited due to limited transmission capacities, respectively, loop-flow restrictions. Originality/value: Literature indicates that negative electricity prices result from lacking flexibility. The results illustrate that active consumers and their additional flexibility can lead to negative electricity prices in temporally coupled markets, which in general contributes to increased system efficiency as well as increased use of renewable energy sources. These findings extend existing research in both the area of energy flexibility and causes for negative electricity prices. Therefore, policymakers should be aware of such (temporal coupling) effects and, e.g. continue to allow negative electricity prices in the future that can serve as investment signals for active consumers. [ABSTRACT FROM AUTHOR]

We compare the first-price sealed-bid (FPSB) auction and the simultaneous multiple-round auction (SMRA) in an environment based on the recent sale of 900 MHz spectrum in Australia. Three bidders compete for five indivisible items. Bidders can win at most three items and need to obtain at least two to achieve profitable scale, i.e. items are complements. Value complementarities, which are a common feature of spectrum auctions, exacerbate the "fitting problem" and undermine the usual logic for superior price discovery in the SMRA. We find that the FPSB outperforms the SMRA across a range of bidding environments: in terms of efficiency, revenue, and protecting bidders from losses due to the exposure problem. Moreover, the FPSB exhibits superior price discovery and almost always results in competitive ("core") prices unlike the SMRA, which frequently produces prices that are too low because of demand-reduction or too high because of the exposure problem. We demonstrate the robustness of our findings by considering two-stage variants of the FPSB and SMRA as well as environments in which bidders know their own values but not the distributions from which values are drawn. [ABSTRACT FROM AUTHOR]

College applicants often make dominated choices even when a strategically simple mechanism such as deferred acceptance is in place. We study Hungarian college admissions, where deferred acceptance is used, and still many college applicants make revealed dominated choices: they forgo the free opportunity to receive a tuition waiver. Using two empirical strategies, we show that when admission with a tuition waiver becomes more selective, applicants make more revealed dominated choices. Our results suggest that dominated choices respond to economic incentives. [ABSTRACT FROM AUTHOR]

We study the problem of a seller (e.g. a bank) who is privately informed about the quality of her asset and wants to exploit gains from trade with uninformed buyers (e.g. investors) by issuing securities backed by her asset cash flows. In our setting, buyers post menus of contracts to screen the seller, but the seller cannot commit to trade with only one buyer, i.e. markets are non-exclusive. We show that non-exclusive markets behave very differently from exclusive ones: (1) separating contracts are never part of equilibrium; (2) mispricing of claims faced by the seller is always greater than in exclusive markets; (3) there is always a semi-pooling equilibrium where all sellers issue the same debt contract priced at average -valuation, and sellers of low -quality assets issue remaining cash flows at low -valuation; (4) market liquidity can be higher or lower than in exclusive markets, but (5) the average quality of originated assets is always lower. Our model's predictions are consistent with empirical evidence on the issuance and pricing of mortgage-backed securities, and we use the theory to evaluate recent reforms aimed at enhancing transparency and exclusivity in markets. [ABSTRACT FROM AUTHOR]

Individuals often deem market transactions in sex, human organs and surrogacy, among others, repugnant. Repugnance norms can be explained by appealing to social-status concerns. We study an exchange economy in which agents abhor consumption dominance: one's social status is compromised if one consumes less of every good than someone else does. Dominance may be forestalled by partitioning goods into submarkets and then invoking the repugnance norms that proscribe trade across these submarkets. Dominance may also be forestalled if individuals strategically 'overconsume' some goods, interpreted as emergent status goods. When equilibria are multiple, there is scope for welfare-enhancing policies that coordinate on status goods. [ABSTRACT FROM AUTHOR]

External effects can be triggered through trade and depend on the locations of buyers and sellers who are matched. Inspired by electricity markets, we experimentally investigate markets in which net trades between two locations induce social costs. Based on a modified double auction setting, we compare the performance of market platforms that are location-blind with those where information on the location of (potential) trading partners or the level of the externality is given. We demonstrate that locational information is sufficient to reduce the externality. Imposing the full external costs on individual trades leads to maximal price differentiation between locations and further reduces net trades, while welfare improvements are limited. Reasons for not achieving the typically high efficiency of double auctions are discussed. [ABSTRACT FROM AUTHOR]

Continuous trading is currently becoming the standard for intraday electricity markets. In this paper, we propose frequent auctions as a viable alternative. We argue that batching orders in auctions potentially leads to lower liquidity cost, more reliable, less noisy price signals, and allows for better alignment of market outcomes with the technical realities of the transmission grid. In an empirical study, we compare the German continuous intraday market with counterfactual outcomes from frequent auctions. We find that traded volumes tend to be higher for continuous trading; however, the auction market benefits from lower liquidity costs and less noisy price signals. Furthermore, we critically discuss the suitability of continuous trading in the presence of network constraints and technical restrictions of conventional units. Taken together these findings suggest that in sparsely traded intraday markets, pooling orders in frequent auctions may be beneficial. [ABSTRACT FROM AUTHOR]

A seller faces a pool of potential bidders that changes over time. She can delay the auction to have a thicker market later on. The seller imposes static distortions (through her choice of reserve prices) and dynamic distortions (through her choice of market thickness). Under a condition on types that generalizes increasing hazard rates, we show that (i) regulating only static distortions can harm efficiency; (ii) when regulating only dynamic distortions, a social planner should reduce market thickness; (iii) if a planner can affect both types of distortions, she should still choose a lower market thickness than the seller, i.e., market thickness is inefficiently high; (iv) the extent of timing disagreement between the seller and a social planner is higher when they both have to use an efficient auction than when they both have to use an optimal one. [ABSTRACT FROM AUTHOR]

Reputation feedback systems assign feedback scores to traders with the aim of separating them according to reliability. There is now a substantial amount of literature on what these mechanisms do well and not so well. Conspicuously absent is a theoretical framework to guide thinking on improving these systems. Here we construct a prototype market, stylized and conceptual in nature, but also suitable for laboratory testing. We use the prototype to examine competing approaches to eliciting feedback from traders. Using entropy to benchmark informativeness, we show that the informativeness of feedback elicitation approaches depends on the ability to solve a coordination problem such that traders use a common mapping to turn experiences into ratings. In theory, different approaches can be about equally informative although the map to coordinate on is more ambiguous in some cases. We then test the approaches in the laboratory. The resulting data find that the most informative feedback is associated with the elicitation methods where the solution to the coordination problem is least ambiguous. This paper was accepted by Yan Chen, behavioral economics and decision analysis. Funding: Financial support from the Deutsche Forschungsgemeinschaft (German Research Foundation) through the Research Unit "Design & Behavior" [FOR 1371] is gratefully acknowledged. The authors thank the Dutch national e-infrastructure for support of the SURF Cooperative. Supplemental Material: The data files and online appendices are available at https://doi.org/10.1287/mnsc.2023.4694. [ABSTRACT FROM AUTHOR]

The drive toward decarbonization has spurred the growth of renewable energy sources, reshaping energy production and consumption patterns. As the energy landscape evolves, so must the market design supporting it to steer the integration of renewable energy. Addressing the challenges of promoting distributed renewable energy is paramount for developing a cleaner energy system and meeting decarbonization targets. This study presents a modern market design that efficiently integrates renewable energy sources, long-term contracts, and flexibility technologies into a single evolved market framework. The approach described herein provides proper price signals for diverse assets and decouples renewable energy from fossil fuels, ensuring economic viability and efficient integration. Taking into consideration key barriers and drivers, the findings provide insights for perfecting energy markets, meeting decarbonization targets, and guiding policymaking to boost cleaner energy systems.

The platform firm has emerged as an important site for the production of economic knowledge. This paper situates the work performed by a newly christened group of “tech economists” under the auspices of these firms within a larger history of economists’ engagement with information processing. Previously, those economists wishing to grapple with the computer would ally with the military, eventually leading them to accept an understanding of markets as purpose-built, algorithmic “person-machine systems.” Upon allying with the platform firm, economists would attune their understanding to the business model of their new patrons. This paper considers what this development augurs for the profession.

The emissions trading scheme (ETS) has piqued substantial interest among economists and policymakers. China officially launched the electricity sector's national carbon emissions trading market in 2021, making it the world's largest compliance carbon market. In contrast to the cap-and-trade (C&T) system prevalent in other economies, China's national carbon market employs a rate-based mechanism that implicitly subsidizes the output of regulated entities; however, is it effective? This study uses a market-design theoretical framework to explore whether China's national carbon market functions effectively and, more critically, what leads to its (slight) underperformance. We discover that policy design, policy conflicts, policy uncertainty, inexperienced market regulation, and excessive or inappropriate government intervention are the primary constraints on this emerging market, resulting in shrinking market thickness, congested market transactions, and lack of safety. For China to establish a better national carbon market, stronger market-oriented rules, appropriate market regulation, improved policy coordination, and greater electricity market reforms are required. [ABSTRACT FROM AUTHOR]

We study multistage centralized assignment systems to allocate scarce resources based on priorities in the context of school choice. We characterize schools' capacity-priority profiles under which an additional stage of assignment may improve student welfare when the deferred acceptance algorithm is used at each stage. If the capacity-priority profile is acyclic, then no student prefers any subgame-perfect Nash equilibrium (SPNE) outcome of the 2-stage system to the truthful dominant-strategy equilibrium outcome of the 1-stage system. If the capacity-priority profile is not acyclic, then an SPNE outcome of the 2-stage system may Pareto dominate the truthful dominant-strategy equilibrium outcome of the 1-stage system. If students are restricted to playing truncation strategies, an additional stage unambiguously improves student welfare: no student prefers the truthful dominant-strategy equilibrium outcome of the 1-stage system to any SPNE outcome of the 2-stage system. [ABSTRACT FROM AUTHOR]

We study the joint implementation of reservation and de-reservation policies in India that has been enforcing comprehensive affirmative action since 1950. The landmark judgment of the Supreme Court of India in 2008 mandated that whenever the OBC category (with 27% reservation) has unfilled positions, they must be reverted to general category applicants in admissions to public schools without specifying how to implement it. We disclose the drawbacks of the recently reformed allocation procedure in admissions to technical colleges and offer a solution through "de-reservation via choice rules." We propose a novel priority design—Backward Transfers (BT) choice rule—for institutions and the deferred acceptance mechanism under these choice rules (DA-BT) for centralized clearinghouses. We show that DA-BT corrects the shortcomings of existing mechanisms. By formulating India's legal requirements and policy goals as formal axioms, we show that the DA-BT mechanism is unique for the concurrent implementation of reservation and de-reservation policies. This paper was accepted by Yan Chen, behavioral economics and decision analysis. [ABSTRACT FROM AUTHOR]

Abstract We argue that owing to traders’ inability to fully express their preferences over the execution times of their orders, contemporary stock market designs are prone to latency arbitrage. In turn, we propose a new order type, which allows traders to specify the time at which their orders are executed after reaching the exchange. Using recent latency data, we demonstrate that the order type proposed here allows traders to synchronize order executions across different exchanges, such that high-frequency traders, even if they operate at the speed of light, can no-longer engage in latency arbitrage.

We study the efficacy of the donor-priority rule in promoting deceased organ donation under blood-type compatibility constraints in both theory and the laboratory. Compared with an allocation policy in which transplantations are performed only within the same blood-type group, we find that transferring organs across blood-type compatible groups discourages the donation incentives of hard-to-match agents and reduces the supply of the more widely acceptable type of organ. Meanwhile, the easy-to-match agents have higher incentives to donate. At the aggregate level, both our theoretical and experimental results suggest that the aggregate donation rate is lower under allocation policies that allow blood-type compatible transplants among different blood-type groups. [ABSTRACT FROM AUTHOR]

Efficient computability is an important property of solution concepts. We consider the computational complexity of finding and verifying various solution concepts in trading networks—multi-sided matching markets with bilateral contracts and without transferable utility—under the assumption of full substitutability of agents' preferences. It is known that outcomes that satisfy trail stability always exist and can be found in linear time. However, we show that the existence of stable outcomes—immune to deviations by arbitrary sets of agents—is an N P -hard problem in trading networks. We also show that even verifying whether a given outcome is stable is N P -hard in trading networks. [ABSTRACT FROM AUTHOR]

We study a field experiment of an incentivized review program on Airbnb and quantify its impact on reviewing behavior and market outcomes. Many online reputation systems operate by asking volunteers to write reviews for free. As a result, a large share of buyers do not review, and those who do review are self-selected. This can cause the reputation system to miss important information about seller quality. We study the extent to which a platform can improve market outcomes by attempting to increase the amount and quality of information collected by its reputation system. We do so by analyzing a randomized experiment conducted by Airbnb. In the treatment, buyers were offered a coupon to review listings that had no prior reviews. In the control, buyers were not offered any incentive to review. We find that, although the treatment induced additional reviews that were more negative on average, these reviews did not affect the number of nights sold or total revenue. Furthermore, we find that, contrary to the treatment's intended effect, Airbnb's incentivized program caused transaction quality for treated sellers to fall. We examine how the quality of the induced reviews, market conditions, and the design of Airbnb's reputation system can explain our findings. History: Catherine Tucker served as the senior editor. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mksc.2023.1439. [ABSTRACT FROM AUTHOR]

We study the design of a decentralized two-sided matching market in which agents' search is guided by the platform. There are finitely many agent types, each with (potentially random) preferences drawn from known type-specific distributions. Equipped with knowledge of these distributions, the platform guides the search process by determining the meeting rate between each pair of types from the two sides. Focusing on symmetric pairwise preferences in a continuum model, we first characterize the unique stationary equilibrium that arises given a feasible set of meeting rates. We then introduce the platform's optimal directed search problem, which involves optimizing meeting rates to maximize equilibrium social welfare. We first show that incentive issues arising from congestion and cannibalization make the design problem fairly intricate. Nonetheless, we develop an efficiently computable search design whose corresponding equilibrium achieves at least 1 / 4 the social welfare of the optimal design. In fact, our construction always recovers at least 1 / 4 the first-best social welfare, where agents' incentives are disregarded. Our search design is simple and easy to implement, as its corresponding bipartite graph consists of disjoint stars. Furthermore, our design implies the platform can substantially limit choice and yet induce an equilibrium with approximately optimal welfare. We offer alternative search designs with improved approximation factors for markets with certain special structures. Finally, we show that approximation is likely the best one can hope for by establishing that the problem of designing optimal directed search is NP -hard to even approximate beyond a certain constant factor. This paper was accepted by Omar Besbes, revenue management and market analytics. Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2022.4601. [ABSTRACT FROM AUTHOR]

Manipulability is a threat to the successful design of centralized matching markets. However, in many applications some manipulation is inevitable and the designer wants to compare manipulable mechanisms to select the best among them. We count the number of agents with an incentive to manipulate and rank mechanisms by their level of manipulability. This ranking sheds a new light on practical design decisions such as the design of the entry‐level medical labor market in the United States, and school admissions systems in New York, Chicago, Denver, and many cities in Ghana and the United Kingdom. [ABSTRACT FROM AUTHOR]

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