arXiv subjects

Simon Finster

Publications and source records attributed to Simon Finster.

6 recordsLinked to original sources

arXiv2026

A Market Design Proposal for Decoupling Carbon and Electricity Prices

In European day-ahead electricity markets, carbon allowance costs passed through by marginal fossil plants raise consumer expenditure and generate inframarginal rents for non-emitting generators. We propose a settlement modification: when the zonal day-ahead price exceeds a threshold, non-emitting generation is remunerated at the clearing price minus a fixed CO2 proxy deduction, while all other units continue to receive the uniform price. The mechanism thus reallocates a part of the inframarginal rents to consumers. Using hourly data we estimate static average expenditure reductions of about 8.5% in Austria and 4.7% in Germany in 2025. We discuss bidding incentives around the threshold, interactions with Contracts for Difference, implementation in coupled bidding zones, and a gas-cost variant for the 2022 energy crisis.

econ.GN↗

arXiv2026

Decentralized Trading Networks: Equilibria and Fairness

We explore stability and fairness considerations in decentralized networked markets with bilateral contracts, building on the trading networks framework [Hatfield et al., 2013]. In our trading network game, we show that a well-defined subset of Nash equilibria can be supported as competitive equilibria. Considering an offer-based trading dynamic as well as a stochastic price clock market, we prove new convergence results to Nash equilibrium and competitive equilibrium, providing a rationale for stability properties in decentralized, dynamic trading networks. Turning to the tension between fairness and (core) stability, we prove several negative results: inessential agents always receive zero utility in any core outcome, and even essential agents can get zero utility in all core outcomes.

econ.TH↗

arXiv2024

Equitable Auctions

We initiate the study of how auction design affects the division of surplus among buyers. We propose a parsimonious measure for equity and apply it to the family of standard auctions for homogeneous goods. Our surplus-equitable mechanism is efficient, Bayesian-Nash incentive compatible, and achieves surplus parity among winners ex-post. The uniform-price auction is equity-optimal if and only if buyers have a pure common value. Against intuition, the pay-as-bid auction is not always preferred in terms of equity if buyers have pure private values. In auctions with price mixing between pay-as-bid and uniform prices, we provide prior-free bounds on the equity-preferred pricing rule under a common regularity condition on signals.

econ.TH↗

arXiv2023

Competitive and Revenue-Optimal Pricing with Budgets

In markets with budget-constrained buyers, competitive equilibria need not be efficient in the utilitarian sense, or maximise the seller's revenue. We consider a setting with multiple divisible goods. Competitive equilibrium outcomes, and only those, are constrained utilitarian efficient, a notion of utilitarian efficiency that respects buyers' demands and budgets. Our main contribution establishes that, when buyers have linear valuations, competitive equilibrium prices are unique and revenue-optimal for a zero-cost seller.

econ.TH↗

arXiv2023

Selling Multiple Complements with Packaging Costs

We consider a package assignment problem with multiple units of indivisible items. The seller can specify preferences over partitions of their supply between buyers as packaging costs. We propose incremental costs together with a graph that defines cost interdependence to express these preferences. This facilitates the use of linear programming to characterize Walrasian equilibrium prices. Firstly, we show that equilibrium prices are uniform, anonymous, and linear in packages. Prices and marginal gains exhibit a nested structure, which we characterize in closed form for complete graphs. Secondly, we provide sufficient conditions for the existence of package-linear competitive prices using an ascending auction implementation. Our framework of partition preferences ensures fair and transparent dual pricing and admits preferences over the concentration of allocated bundles in the market.

econ.TH↗

arXiv2022

Welfare-Maximizing Pooled Testing

Pooled testing increases the reach of scarce diagnostic resources, but optimally composing pools for individuals differing in infection risk and the utility they derive from a negative test is combinatorially challenging. We study the problem of maximizing the expected welfare of individuals cleared by a negative result, given a testing budget. Assigning a sample to several pools can raise welfare but is operationally burdensome; we show the restriction to non-overlapping allocations costs at most a factor of two for any budget or population, less under a pool-size cap at high health probabilities, and nothing when no health probability exceeds one-half. Welfare decomposes across non-overlapping pools, whereas evaluating overlapping allocations is #P-hard for pools of three or more. Finding optimal allocations is NP-hard and admits no FPTAS, with or without overlap, unless P = NP. We provide single-test routines and greedy algorithms with constant-factor guarantees. On real-world data, greedy achieves over 99% of optimal non-overlapping welfare in milliseconds, against hours for exact benchmarks. In a randomized field experiment at a Mexican research institute, our mechanism conditioned campus access on negative qPCR results. Relative to unrestricted access, we found no statistical evidence of adverse effects on participants' performance, learning, or mental health.

cs.GT↗