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A dynamic auction for multi-object procurement under a hard budget constraint

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  • Ensthaler, Ludwig
  • Giebe, Thomas

Abstract

This contribution revisits the problem of allocating R&D subsidies by government agencies. Typically, the applicants’ financial constraints are private information. The literature has recommended the use of auctions in order to reduce information rents and thus improve the efficiency of how scarce public funds are allocated. We propose a new open clock auction for this procurement problem. This auction is strategically simple, as it exhibits truthtelling in dominant strategies and satisfies ex-post rationality, while observing the budget constraint. We test the auction in Monte-Carlo simulation and discuss its applicability and limitations. Moreover, we highlight connections to recent advances in computer science.

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  • Ensthaler, Ludwig & Giebe, Thomas, 2014. "A dynamic auction for multi-object procurement under a hard budget constraint," Research Policy, Elsevier, vol. 43(1), pages 179-189.
    • Handle: RePEc:eee:respol:v:43:y:2014:i:1:p:179-189
    DOI: 10.1016/j.respol.2013.06.011
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    1. Czarnitzki, Dirk & Lopes-Bento, Cindy, 2013. "Value for money? New microeconometric evidence on public R&D grants in Flanders," Research Policy, Elsevier, vol. 42(1), pages 76-89.
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    Cited by:

    1. Giebe, Thomas, 2014. "Innovation contests with entry auction," Journal of Mathematical Economics, Elsevier, vol. 55(C), pages 165-176.
    2. Jarman, Felix & Meisner, Vincent, 2017. "Ex-post optimal knapsack procurement," Journal of Economic Theory, Elsevier, vol. 171(C), pages 35-63.
    3. Ensthaler, Ludwig & Giebe, Thomas, 2014. "Bayesian optimal knapsack procurement," European Journal of Operational Research, Elsevier, vol. 234(3), pages 774-779.
    4. Paul Dütting & Vasilis Gkatzelis & Tim Roughgarden, 2017. "The Performance of Deferred-Acceptance Auctions," Mathematics of Operations Research, INFORMS, vol. 42(4), pages 897-914, November.

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    More about this item

    Keywords

    Research; Subsidies; Auctions; Procurement; Budget;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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