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Multiple-Object Auctions with Budget Constrained Bidders

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Author Info
Jean-Pierre Benoit (New York University)
Vijay Krishna (Penn State University)
Abstract

A seller with two objects faces a group of bidders who are subject to budget constraints. The objects have common values to all bidders, but need not be identical and may be either complements or substitutes. In a simple complete information setting we show: (1) if the objects are sold by means of a sequence of open ascending auctions, then it is always optimal to sell the more valuable object first; (2) the sequential auction yields more revenue than the simultaneous ascending auction used recently by the FCC if the discrepancy in the values is large, or if there are significant complementarities; (3) a hybrid simultaneous- sequential form is revenue superior to the sequential auction; and (4) budget constraints arise endogenously.

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Publisher Info
Paper provided by EconWPA in its series Game Theory and Information with number 9805001.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 34 pages
Date of creation: 05 May 1998
Date of revision: 26 Jul 1999
Handle: RePEc:wpa:wuwpga:9805001

Note: Type of Document - SciWord-LaTex; prepared on IBM PC ; to print on HP Laserjet 4; pages: 34; figures: None
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Web page: http://129.3.20.41

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Related research
Keywords: Auctions; Budgets;

Find related papers by JEL classification:
D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information

This paper has been announced in the following NEP Reports:

References listed on IDEAS
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  1. Pitchik, Carolyn & Schotter, Andrew, 1986. "Budget Constrained Sequential Auctions," Working Papers 86-21, C.V. Starr Center for Applied Economics, New York University. [Downloadable!]
  2. David J. Salant, 1997. "Up in the Air: GTE's Experience in the MTA Auction for Personal Communication Services Licenses," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 6(3), pages 549-572, 09. [Downloadable!] (restricted)
  3. Lawrence M. Ausubel & Peter Cramton & R. Preston McAfee & John McMillan, 1998. "Synergies in Wireless Telephony: Evidence from the Broadband PCS Auctions," Papers of Peter Cramton 97jems, University of Maryland, Department of Economics - Peter Cramton, revised 09 Jun 1998. [Downloadable!]
    Other versions:
  4. T. N. Srinivasan, 1997. "Introduction," Economics and Politics, Blackwell Publishing, vol. 9(3), pages 205-205, November. [Downloadable!] (restricted)
  5. Adams, William James & Yellen, Janet L, 1976. "Commodity Bundling and the Burden of Monopoly," The Quarterly Journal of Economics, MIT Press, vol. 90(3), pages 475-98, August. [Downloadable!] (restricted)
  6. McMillan, John, 1994. "Selling Spectrum Rights," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 145-62, Summer. [Downloadable!] (restricted)
  7. R. H. Parker, Y. Lemarchand, T. Boyns, 1997. "Introduction," Accounting, Business and Financial History, Taylor and Francis Journals, vol. 7(3), pages 251-257, November. [Downloadable!] (restricted)
  8. Peter Cramton, 1997. "The FCC Spectrum Auctions: An Early Assessment," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 6(3), pages 431-495, 09. [Downloadable!] (restricted)
    Other versions:
  9. Pitchik, Carolyn & Schotter, Andrew, 1986. "Perfect Equilibria in Budget Constrained Sequential Auctions: An Experimental Study," Working Papers 86-22, C.V. Starr Center for Applied Economics, New York University. [Downloadable!]
    Other versions:
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