A Market-Based Optimization Algorithm for Distributed Systems

In this paper, a market-based decomposition method for decomposable linear systems is developed. The solution process iterates between a master problem that solves the market-matching problem, and subproblems that solve the agents’ bundle determination problems. Starting from any initial price and feasible allocation, system optimality can be achieved under a dynamic market-trading algorithm in a finite number of trades. The final market clearing prices are discovered by this market trading and an efficient allocation is achieved by direct, wealth improving resource exchanges among self-interested agents. Certain types of strategic behavior by the agents and a dealer in the marketplace are studied as well. Our proposed market mechanism addresses price dynamics, incentive issues, and economic transactions of real-world, distributed decision making situations more realistically than traditional decomposition approaches. In addition, it can be operated in both synchronous and asynchron...

• Type: Journal
• Year: 2007
• Where: MANSCI
• Authors: Zhiling Guo, Gary J. Koehler, Andrew B. Whinston
• Keywords: Decomposable Linear Systems, Dynamic Market-trading Algorithm, MANSCI 2007, Market-based Decomposition Method