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Vickrey Auctions in Practice: From Nineteenth-Century Philately to Twenty-First-Century E-Commerce

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  • David Lucking-Reiley

Abstract

William Vickrey (1961) proposed an auction mechanism in which bidders submit sealed bids, and the highest bidder wins the good in return for payment of the second-highest bid amount. For decades, economists have credited Vickrey with inventing this auction format, and have believed that the Vickrey auction is rarely used in practice. This paper presents evidence that Vickrey auctions have long been the predominant auction format for mail sales of collectible postage stamps. Stamp auctioneers developed this auction format on their own, as early as 1893, even before Vickrey was born.

Suggested Citation

  • David Lucking-Reiley, 2000. "Vickrey Auctions in Practice: From Nineteenth-Century Philately to Twenty-First-Century E-Commerce," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 183-192, Summer.
    • Handle: RePEc:aea:jecper:v:14:y:2000:i:3:p:183-192
    Note: DOI: 10.1257/jep.14.3.183
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    References listed on IDEAS

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    1. Rothkopf, Michael H & Harstad, Ronald M, 1995. "Two Models of Bid-Taker Cheating in Vickrey Auctions," The Journal of Business, University of Chicago Press, vol. 68(2), pages 257-267, April.
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    3. Richard Arnott, 1998. "William Vickrey: Contributions to Public Policy," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 5(1), pages 93-113, February.
    4. Rothkopf, Michael H & Teisberg, Thomas J & Kahn, Edward P, 1990. "Why Are Vickrey Auctions Rare?," Journal of Political Economy, University of Chicago Press, vol. 98(1), pages 94-109, February.
    5. Lucking-Reiley, David, 2000. "Auctions on the Internet: What's Being Auctioned, and How?," Journal of Industrial Economics, Wiley Blackwell, vol. 48(3), pages 227-252, September.
    6. Benny Moldovanu & Manfred Tietzel, 1998. "Goethe's Second-Price Auction," Journal of Political Economy, University of Chicago Press, vol. 106(4), pages 854-859, August.
    7. David Lucking-Reiley, 1999. "Using Field Experiments to Test Equivalence between Auction Formats: Magic on the Internet," American Economic Review, American Economic Association, vol. 89(5), pages 1063-1080, December.
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    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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