Generalized reduced-form auctions: a network-flow approach

Abstract

We develop a network-flow approach for characterizing interim-allocation rules that can be implemented by ex post allocations. Our method can be used to characterize feasible interim allocations in general multi-unit auctions where agents face capacity constraints, both ceilings and floors. Applications include a variety of settings of practical interest, ranging from individual and group-specific capacity constraints, set-aside sale, partnership dissolution, and government license reallocation.Reduced-form auctions, network-flow approach, feasible circulation flow, paramodular capacity constraints