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The Clock-Proxy Auction: A Practical Combinatorial Auction Design

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Author Info

  • Lawrence M. Ausubel

    (University of Maryland)

  • Peter Crampton

    (University of Maryland)

  • Paul Milgrom

    (Stanford University)

Abstract

We propose the clock-proxy auction as a practical means for auctioning many related items. A clock auction phase is followed by a last-and-final proxy round. The approach combines the simple and transparent price discovery of the clock auction with the efficiency of the proxy auction. Linear pricing is maintained as long as possible, but then is abandoned in the proxy round to improve efficiency and enhance seller revenues. The approach has many advantages over the simultaneous ascending auction. In particular, the clock-proxy auction has no exposure problem, eliminates incentives for demand reduction, and prevents most collusive bidding strategies.

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Bibliographic Info

Paper provided by Stanford Institute for Economic Policy Research in its series Discussion Papers with number 03-034.

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Date of creation: Aug 2004
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Handle: RePEc:sip:dpaper:03-034

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References

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  1. Paul R. Milgrom, 1985. "Auction Theory," Cowles Foundation Discussion Papers 779, Cowles Foundation for Research in Economics, Yale University.
  2. Milgrom,Paul, 2004. "Putting Auction Theory to Work," Cambridge Books, Cambridge University Press, number 9780521551847, October.
  3. Lawrence M. Ausubel & Peter Cramton, 2004. "Auctioning Many Divisible Goods," Papers of Peter Cramton 04jeea, University of Maryland, Department of Economics - Peter Cramton, revised 2004.
  4. Paul Milgrom, 2000. "Putting Auction Theory to Work: The Simultaneous Ascending Auction," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 245-272, April.
  5. Paul Klemperer, 2000. "What Really Matters in Auction Design," Economics Series Working Papers 2000-W26, University of Oxford, Department of Economics.
  6. Lawrence M. Ausubel & Paul Milgrom, 2002. "Ascending Auctions with Package Bidding," Working Papers 02004, Stanford University, Department of Economics.
  7. Peter Cramton & Evan Kwerel & John Williams, 1998. "Efficient Relocation of Spectrum Incumbents," Papers of Peter Cramton 98jleer, University of Maryland, Department of Economics - Peter Cramton, revised 12 Jul 1998.
  8. R. Preston McAfee & John McMillan, 1996. "Analyzing the Airwaves Auction," Journal of Economic Perspectives, American Economic Association, vol. 10(1), pages 159-175, Winter.
  9. Peter Cramton, 1997. "The FCC Spectrum Auctions: An Early Assessment," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(3), pages 431-495, 09.
  10. Lawrence M. Ausubel & Peter Cramton, 1995. "Demand Reduction and Inefficiency in Multi-Unit Auctions," Papers of Peter Cramton 98wpdr, University of Maryland, Department of Economics - Peter Cramton, revised 22 Jul 2002.
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Citations

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Cited by:
  1. Paul Milgrom, 2007. "Simplified Mechanisms with Applications to Sponsored Search and Package Auctions," Levine's Bibliography 122247000000001454, UCLA Department of Economics.
  2. Robert Day & Peter Cramton, 2008. "Quadratic Core-Selecting Payment Rules for Combinatorial Auctions," Papers of Peter Cramton 08qcspr, University of Maryland, Department of Economics - Peter Cramton, revised 2012.
  3. Peter Cramton, 2009. "Innovation and Market Design," NBER Chapters, in: Innovation Policy and the Economy, Volume 9, pages 113-137 National Bureau of Economic Research, Inc.
  4. Eiichiro Kazumori, 2010. "Core-Selecting Auctions: An Experimental Study," CARF F-Series CARF-F-226, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
  5. Aytek Erdil & Paul Klemperer, 2010. "A New Payment Rule for Core-Selecting Package Auctions," Journal of the European Economic Association, MIT Press, vol. 8(2-3), pages 537-547, 04-05.
  6. Paul Milgrom, 2003. "Matching with Contracts," Working Papers 03003, Stanford University, Department of Economics.
  7. Daniele Condorelli, 2007. "Efficient and Equitable Airport Slot Allocation," Rivista di Politica Economica, SIPI Spa, vol. 97(1), pages 81-104, January-F.
  8. Laurent Lamy, 2010. "Core-selecting package auctions: a comment on revenue-monotonicity," International Journal of Game Theory, Springer, vol. 39(3), pages 503-510, July.
  9. Peter Cramton & Steven Stoft, 2007. "Colombia Firm Energy Market," Papers of Peter Cramton 07cfem, University of Maryland, Department of Economics - Peter Cramton, revised 2007.
  10. Emiel Maasland & Sander Onderstal, 2006. "Going, Going, Gone! A Swift Tour of Auction Theory and its Applications," De Economist, Springer, vol. 154(2), pages 197-249, June.
  11. Michael O. Ball & Lawrence M. Ausubel & Frank Berardino & Peter Cramton & George Donohue & Mark Hansen & Karla Hoffman, 2007. "Market-Based Alternatives for Managing Congestion at New York’s LaGuardia Airport," Papers of Peter Cramton 07mbac, University of Maryland, Department of Economics - Peter Cramton, revised 2007.
  12. A. Mochon & Y. Saez & J. Gómez-Barroso & P. Isasi, 2011. "The Clock Proxy Auction for Allocating Radio Spectrum Licenses," Computational Economics, Society for Computational Economics, vol. 37(4), pages 411-431, April.
  13. Nicolas Melissas, 2008. "Bidding and Drilling on Offshore Wildcat Tracts," Working Papers 0805, Centro de Investigacion Economica, ITAM.
  14. Axel Ockenfels & David Reiley & Abdolkarim Sadrieh, 2006. "Online Auctions," NBER Working Papers 12785, National Bureau of Economic Research, Inc.

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