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Auctioning public goods to groups of aghents

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Author Info

  • ALBOTH, Dirk

    () (Mathematik, University Paderbon, D-33095 Padernborn, Germany)

  • LERNER, Anat

    () (Tel-Aviv University, Faculty of Management, Recanati Graduate School of Business Administration, Tel-Aviv, 69978 Israel)

  • SHALEV, Jonathan

    () (Center for Operations Research and Econometrics (CORE), Université catholique de Louvain (UCL), Louvain la Neuve, Belgium)

Abstract

A profit-maximizing auctioneer can provide a public good to at most one of a number of groups of agents. The groups may have non-empty intersections. Each group member has a private value for the good being provided to the group. We investigate an auction mechanism where the auctioneer provides the good to the group with the highest sum of the agents’ bids, only if this sum exceeds a minimum price declared previously by the auctioneer. For the one-group two-bidder case with private values drawn from a uniform distribution we characterize the continuously differentiable symmetric equilibrium bidding functions for the agents, and find the optimal minimum price for the auctioneer when such functions are used by the bidders. We also examine another interesting family of equilibrium bidding functions for this case. with a discrete number of possible bids, and show the relation (in the limit) to the differentiable bidding functions

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Bibliographic Info

Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 1997077.

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Date of creation: 01 Oct 1997
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Handle: RePEc:cor:louvco:1997077

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Related research

Keywords: public goods; auctions; externalities;

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References

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  1. McAfee, R Preston & McMillan, John, 1987. "Auctions and Bidding," Journal of Economic Literature, American Economic Association, vol. 25(2), pages 699-738, June.
  2. Groves, Theodore & Ledyard, John O, 1977. "Optimal Allocation of Public Goods: A Solution to the "Free Rider" Problem," Econometrica, Econometric Society, vol. 45(4), pages 783-809, May.
  3. Isaac, R. Mark & McCue, Kenneth F. & Plott, Charles R., . "Public Goods Provision in an Experimental Environment," Working Papers 428, California Institute of Technology, Division of the Humanities and Social Sciences.
  4. Nitzan, Shmuel, 1991. "Collective Rent Dissipation," Economic Journal, Royal Economic Society, vol. 101(409), pages 1522-34, November.
  5. McAfee, R. Preston & McMillan, John., 1990. "Bidding Rings," Working Papers 726, California Institute of Technology, Division of the Humanities and Social Sciences.
  6. Baik, Kyung Hwan, 1993. "Effort levels in contests : The public-good prize case," Economics Letters, Elsevier, vol. 41(4), pages 363-367.
  7. Jehiel, Philippe & Benny Moldovanu, 1994. "Strategic Non-Participation," Discussion Paper Serie B 287, University of Bonn, Germany.
  8. Cornes, Richard & Sandler, Todd, 1984. "Easy Riders, Joint Production, and Public Goods," Economic Journal, Royal Economic Society, vol. 94(375), pages 580-98, September.
  9. Bliss, Christopher & Nalebuff, Barry, 1984. "Dragon-slaying and ballroom dancing: The private supply of a public good," Journal of Public Economics, Elsevier, vol. 25(1-2), pages 1-12, November.
  10. John McMillan, 1994. "Selling Spectrum Rights," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 145-162, Summer.
  11. Douglas K. Reece, 1978. "Competitive Bidding for Offshore Petroleum Leases," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 369-384, Autumn.
  12. Jehiel, Phillipe & Moldovanu, Benny & Stacchetti, E., 1997. "Multidimensional Mechanism Design for Auctions with Externalities," Sonderforschungsbereich 504 Publications 97-04, Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim.
  13. M. Landsberger & J. Rubinstein & E. Wolfstetter & S. Zamir, 1996. "First-Price Auctions when the Ranking of Valuations is Common Knowledge," SFB 373 Discussion Papers 1996,36, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
  14. Sugden, Robert, 1984. "Reciprocity: The Supply of Public Goods through Voluntary Contributions," Economic Journal, Royal Economic Society, vol. 94(376), pages 772-87, December.
  15. repec:wop:humbsf:1996-36 is not listed on IDEAS
  16. Wilson, Robert, 1977. "A Bidding Model of Perfect Competition," Review of Economic Studies, Wiley Blackwell, vol. 44(3), pages 511-18, October.
  17. Lerner, Anat, 1998. "A Pie Allocation Among Sharing Groups," Games and Economic Behavior, Elsevier, vol. 22(2), pages 316-330, February.
  18. Schneider, Friedrich & Pommerehne, Werner W, 1981. "Free Riding and Collective Action: An Experiment in Public Microeconomics," The Quarterly Journal of Economics, MIT Press, vol. 96(4), pages 689-704, November.
  19. Katz, Eliakim & Nitzan, Shmuel & Rosenberg, Jacob, 1990. " Rent-Seeking for Pure Public Goods," Public Choice, Springer, vol. 65(1), pages 49-60, April.
  20. Brubaker, Earl R, 1975. "Free Ride, Free Revelation, or Golden Rule?," Journal of Law and Economics, University of Chicago Press, vol. 18(1), pages 147-61, April.
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