Resource allocation under demand uncertainty and private information
We study the effect of multilateral private information on the efficiency of markets where capacity-constrained upstream agents supply a resource to downstream entities facing uncertain end-demands. We analyze two models: a "pooling system," in which a single downstream principal pools a resource from multiple upstream agents; and a "distribution system," in which one upstream principal allocates a resource across multiple downstream agents. We show that the presence of multilateral private information does not hinder efficiency in the pooling system. In contrast, in the distribution system, the quantities allocated to downstream agents can exceed, as well as fall short of, their first-best levels. These results shed light on the recently improved performance of U.S. agricultural produce market, and the observed episodes of shortages/oversupplies in flu vaccine and other seasonal markets.
Duke Scholars
Altmetric Attention Stats
Dimensions Citation Stats
Published In
DOI
EISSN
ISSN
Publication Date
Volume
Issue
Start / End Page
Related Subject Headings
- Operations Research
- 46 Information and computing sciences
- 38 Economics
- 35 Commerce, management, tourism and services
- 15 Commerce, Management, Tourism and Services
- 08 Information and Computing Sciences
Citation
Published In
DOI
EISSN
ISSN
Publication Date
Volume
Issue
Start / End Page
Related Subject Headings
- Operations Research
- 46 Information and computing sciences
- 38 Economics
- 35 Commerce, management, tourism and services
- 15 Commerce, Management, Tourism and Services
- 08 Information and Computing Sciences