Did you know that your browser is out of date?
For the best experience we recommend upgrading to the latest version of these supported browsers:
I wish to continue viewing on my unsupported browser
Optimal Sequential Auctions for Complements
31 May 2003
Dr. Soren Tang Sorensen
In this article NERA Senior Consultant Dr. Sorensen outlines a sequence of optimal auction mechanisms derived in a framework where two complementary objects become available over time.
He finds that with independent revenue-maximizing sellers, the sequence of optimal auctions may allocate the two objects as a bundle either more or less often than is socially efficient. Moreover, each seller imposes a negative externality on the other seller by maximizing own revenue. Consequently, a sequence of coordinated auction mechanisms can increase joint revenue.
Dr. Sorensen concludes that under the joint optimal auction mechanism objects are allocated as a bundle more often than under independently designed auction mechanisms.
This paper was presented at the Nordic Workshop in Industrial Organization, (NORDIO IV) in Copenhagen, 30-31 May 2003. Comments are welcome.