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Optimal complementary auctions

Cripps, M.W.; Ireland, N.; (2001) Optimal complementary auctions. Bulletin of Economic Research , 53 (2) pp. 81-100. Green open access

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This paper considers the situation where two products are sold by the same seller, but to disjoint sets of potential buyers. Externalities may arise from each market outcome to the other. The paper examines the nature of the seller's optimal mechanism, and, for example in the case of positive externalities, it is shown that the allocation decision in either market depends on the highest types in both markets. The optimal mechanism can be implemented by an indirect mechanism that essentially charges winning bidders for the value of their externalities. The analysis is applied to the sale of public sector franchises including exploration and development rights for oil and gas tracts.

Type: Article
Title: Optimal complementary auctions
Identifier: 10.1111/1467-8586.00120
Open access status: An open access version is available from UCL Discovery
Publisher version: http://dx.doi.org/10.1111/1467-8586.00120
Language: English
Additional information: The definitive version is available at www.blackwell-synergy.com
UCL classification: UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/16383
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