Multidimensional Mechanism Design for Auctions with Externalities
In our framework, when a buyer does not obtain the auctioned object, he is no longer indifferent about the identity of the winner (i.e., eyternal effects are present). Buyer i's preferences are characterized by an N-dimensional vector t^i = (t1^i, t2^i,..,tN^i). The coordinate ti^i can be interpreted as the usual "private value" of player i, while each other coordinate tj^i represents i's total payoff should j get the object. In this framework, we characterize incentive-compatible and individually-rational mechanisms, and look at second price auctions (which, under some conditions, maximize the seller's revenue). Any incentive combatible mechanism induces a conditional probability assignement vector field which is conservative. A useful geometric property of conservative vector fields is used for the derivation of a differential equation which determines equilibrium bids. Finally, we show that exclusion (i.e., the announcement of a reservation price such that a measure can never get the object) is not necessarilly optimal for the seller. This contrasts with Armstrong's (Econometrica, 1995) insight about the optimality of exclusion in another multidimensional setting.
(This abstract was borrowed from another version of this item.)
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Wilson, Robert, 1991. "Erratum [Multiproduct Tariffs]," Journal of Regulatory Economics, Springer, vol. 3(2), pages 211-12, June.
- Champsaur, Paul & Rochet, Jean-Charles, 1989.
Econometric Society, vol. 57(3), pages 533-57, May.
- McAfee, R. Preston & McMillan, John, 1988. "Multidimensional incentive compatibility and mechanism design," Journal of Economic Theory, Elsevier, vol. 46(2), pages 335-354, December.
- Paul Milgrom & Robert J. Weber, 1981.
"A Theory of Auctions and Competitive Bidding,"
447R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Armstrong, Mark, 1996. "Multiproduct Nonlinear Pricing," Econometrica, Econometric Society, vol. 64(1), pages 51-75, January.
- McAfee, R Preston & McMillan, John & Whinston, Michael D, 1989. "Multiproduct Monopoly, Commodity Bundling, and Correlation of Values," The Quarterly Journal of Economics, MIT Press, vol. 104(2), pages 371-83, May.
- Jean-Charles Rochet & Philippe Chone, 1998. "Ironing, Sweeping, and Multidimensional Screening," Econometrica, Econometric Society, vol. 66(4), pages 783-826, July.
- ehiel, Philippe & Benny Moldovanu & Ennio Stacchetti, 1994.
"How (not) to sell nuclear weapons,"
Discussion Paper Serie B
288, University of Bonn, Germany.
- Leonard J. Mirman & David Sibley, 1980. "Optimal Nonlinear Prices for Multiproduct Monopolies," Bell Journal of Economics, The RAND Corporation, vol. 11(2), pages 659-670, Autumn.
- Steven Matthews & John Moore, 1985.
"Monopoly Provision of Quality and Warranties: An Exploration in the Theory of Multidimensional Screening,"
661, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Matthews, Steven & Moore, John, 1987. "Monopoly Provision of Quality and Warranties: An Exploration in the Theory of Multidimensional Screening," Econometrica, Econometric Society, vol. 55(2), pages 441-67, March.
- Wilson, Robert, 1991. "Multiproduct Tariffs," Journal of Regulatory Economics, Springer, vol. 3(1), pages 5-26, March.
- Palfrey, Thomas R, 1983. "Bundling Decisions by a Multiproduct Monopolist with Incomplete Information," Econometrica, Econometric Society, vol. 51(2), pages 463-83, March.
- Spence, A Michael, 1980. "Multi-Product Quantity-Dependent Prices and Profitability Constraints," Review of Economic Studies, Wiley Blackwell, vol. 47(5), pages 821-41, October.
- Laffont, Jean-Jacques & Tirole, Jean, 1990. "The regulation of multiproduct firms : Part I: Theory," Journal of Public Economics, Elsevier, vol. 43(1), pages 1-36, October.
When requesting a correction, please mention this item's handle: RePEc:eee:jetheo:v:85:y:1999:i:2:p:258-293. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If references are entirely missing, you can add them using this form.