New Results on Rationality and Strongly Polynomial Time Solvability in Eisenberg-Gale Markets

We study the structure of EG[2], the class of Eisenberg-Gale markets with two agents. We prove that all markets in this class are rational and they admit strongly polynomial algorithms whenever the polytope containing the set of feasible utilities of the two agents can be described via a combinatorial LP. This helps resolve positively the status of two markets left as open problems by [JV07]: the capacity allocation market in a directed graph with two source-sink pairs and the network coding market in a directed network with two sources. Our algorithms for solving the corresponding nonlinear convex programs are fundamentally different from those obtained by [JV07]; whereas they use the primal-dual schema, we use a carefully constructed binary search.