Product-Mix Auctions and Tropical Geometry

In a recent and ongoing work, Baldwin and Klemperer found a connection between tropical geometry and economics. They gave a sufficient condition for the existence of competitive equilibrium in product-mix auctions of indivisible goods. This result, which we call the Unimodularity Theorem, can also be traced back to the work of Danilov, Koshevoy, and Murota. We introduce auction theory for a mathematical audience and give two simple proofs of the Unimodularity Theorem — one via tropical and discrete geometry, and one via integer programming. We also give connections to Walrasian economies, stable matching with transferable utilities, the theory of discrete convex analysis, and some well-known problems on lattice polytopes.