The Power of Fair Pricing Mechanisms

Christine Chung*, Katrina Ligett, Kirk Pruhs, Aaron Roth

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

1 Scopus citations


We explore the revenue capabilities of truthful, monotone (“fair”) allocation and pricing functions for resource-constrained auction mechanisms within a general framework that encompasses unlimited supply auctions, knapsack auctions, and auctions with general non-decreasing convex production cost functions.We study and compare the revenue obtainable in each fair pricing scheme to the profit obtained by the ideal omniscient multi-price auction. We show that for capacitated knapsack auctions, no constant pricing scheme can achieve any approximation to the optimal profit, but proportional pricing is as powerful as general monotone pricing. In addition, for auction settings with arbitrary bounded non-decreasing convex production cost functions, we present a proportional pricing mechanism which achieves a polylogarithmic approximation. Unlike existing approaches, all of our mechanisms have fair (monotone) prices, and all of our competitive analysis is with respect to the optimal profit extraction.

Original languageAmerican English
Pages (from-to)634-644
Number of pages11
Issue number3
StatePublished - Jul 2012
Externally publishedYes

Bibliographical note

Publisher Copyright:
© Springer Science+Business Media, LLC 2011.


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