Robust Market Interventions
Year: 2024
Type: report
Abstract: A large differentiated oligopoly yields inefficient market equilibria. An authority with imprecise information about the primitives of the market aims to design tax/subsidy interventions that increase efficiency robustly—i.e., with high probability. We identify a condition on demand that guarantees the existence of such interventions, and we show how to construct them using noisy estimates of demand complementarities and substitutabilities across products. The analysis works by deriving a novel description of the incidence of market interventions in terms of spectral statistics of Slutsky matrices. Our notion of recoverable structure ensures that parts of the spectrum that are useful for the design of interventions are statistically recoverable from noisy demand estimates.
Source: Apollo (University of Cambridge)
DOI: 10.17863/cam.114230
Authors: Galeotti, A., Golub, B., Goyal, S., Talamas, E., Tamuz, O.
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W6944297842
Cites:
Cited by:
Related to: