The Capacity Constrained Facility Location problem
This work addresses strategic decision-making in facility location with capacity limits, providing foundational insights for social choice and mechanism design, though it is incremental in extending known frameworks.
The paper tackles the capacity constrained facility location problem from a mechanism design perspective, characterizing DIC mechanisms via Generalized Median Mechanisms and showing that the median mechanism is optimal for certain capacity ranges, with tight lower bounds on approximation ratios.
We initiate the study of the capacity constrained facility location problem from a mechanism design perspective. The capacity constrained setting leads to a new strategic environment where a facility serves a subset of the population, which is endogenously determined by the ex-post Nash equilibrium of an induced subgame and is not directly controlled by the mechanism designer. Our focus is on mechanisms that are ex-post dominant-strategy incentive compatible (DIC) at the reporting stage. We provide a complete characterization of DIC mechanisms via the family of Generalized Median Mechanisms (GMMs). In general, the social welfare optimal mechanism is not DIC. Adopting the worst-case approximation measure, we attain tight lower bounds on the approximation ratio of any DIC mechanism. The well-known median mechanism is shown to be optimal among the family of DIC mechanisms for certain capacity ranges. Surprisingly, the framework we introduce provides a new characterization for the family of GMMs, and is responsive to gaps in the current social choice literature highlighted by Border and Jordan (1983) and Barbar{à}, Mass{ó} and Serizawa (1998).