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Multi-object Auctions: On the Use of Combinational Bids

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  • Branco, Fernando

Abstract

This paper studies multiple object auctions when there are two kinds of bidders: those interested in the bundle being sold (bundle bidders) and those that want one specific object only (unit bidders). The analysis has been motivated by the sale of spectrum rights in the United States.Using a simple model of independent valuations I explore the properties of the optimal auction and its implementation. I show that an optimal mechanism requires combinational bids for the bundle and for each of the units. Moreover, if the optimal mechanism allocates the objects efficiently, a combination of second-price auctions allows the implementation of the optimal mechanism, while a combination of first-price auctions does not.

Suggested Citation

  • Branco, Fernando, 1995. "Multi-object Auctions: On the Use of Combinational Bids," CEPR Discussion Papers 1216, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:1216
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    Citations

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    Cited by:

    1. Marcel Boyer & Jacques Robert, 1997. "Competition and Access in Electricity Markets: ECPR, Global Price Cap, and Auctions," CIRANO Working Papers 97s-41, CIRANO.
    2. Jean-Jacques Laffont, 1998. "Théorie des jeux et économie empirique : le cas des données issues d'enchères," Économie et Prévision, Programme National Persée, vol. 132(1), pages 121-137.
    3. Michael H. Rothkopf & Aleksandar Pekev{c} & Ronald M. Harstad, 1998. "Computationally Manageable Combinational Auctions," Management Science, INFORMS, vol. 44(8), pages 1131-1147, August.
    4. Laffont, Jean-Jacques, 1997. "Game theory and empirical economics: The case of auction data 1," European Economic Review, Elsevier, vol. 41(1), pages 1-35, January.
    5. Crémer, Jacques & Hariton, Cyril, 2003. "Rental of a Durable Good," IDEI Working Papers 162, Institut d'Économie Industrielle (IDEI), Toulouse.
    6. Branco, Fernando, 1997. "Sequential auctions with synergies: An example," Economics Letters, Elsevier, vol. 54(2), pages 159-163, February.
    7. Marcel Boyer, 1997. "Competition and Access in Telecoms: ECPR, Global Price Cap, and Auctions," CIRANO Working Papers 97s-03, CIRANO.
    8. Branco, Fernando, 2001. "On the superiority of the multiple round ascending bid auction," Economics Letters, Elsevier, vol. 70(2), pages 187-194, February.

    More about this item

    Keywords

    Auctions; Combinational Bids; Mechanism Design;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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