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.)
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
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.:
- Matthews, Steven & Moore, John, 1987.
"Monopoly Provision of Quality and Warranties: An Exploration in the Theory of Multidimensional Screening,"
Econometric Society, vol. 55(2), pages 441-467, March.
- Steven Matthews & John Moore, 1985. "Monopoly Provision of Quality and Warranties: An Exploration in the Theory of Multidimensional Screening," Discussion Papers 661, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Champsaur, Paul & Rochet, Jean-Charles, 1989. "Multiproduct Duopolists," Econometrica, Econometric Society, vol. 57(3), pages 533-557, May.
- CHAMPSAUR, Paul & ROCHET, Jean-Charles, "undated". "Multiproduct duopolists," CORE Discussion Papers RP 854, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Jehiel, Philippe & Moldovanu, Benny & Stacchetti, Ennio, 1996. "How (Not) to Sell Nuclear Weapons," American Economic Review, American Economic Association, vol. 86(4), pages 814-829, September.
- ehiel, Philippe & Benny Moldovanu & Ennio Stacchetti, 1994. "How (not) to sell nuclear weapons," Discussion Paper Serie B 288, University of Bonn, Germany.
- 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.
- A. Michael Spence, 1980. "Multi-Product Quantity-Dependent Prices and Profitability Constraints," Review of Economic Studies, Oxford University Press, vol. 47(5), pages 821-841.
- Armstrong, Mark, 1996. "Multiproduct Nonlinear Pricing," Econometrica, Econometric Society, vol. 64(1), pages 51-75, January.
- 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.
- Palfrey, Thomas R, 1983. "Bundling Decisions by a Multiproduct Monopolist with Incomplete Information," Econometrica, Econometric Society, vol. 51(2), pages 463-483, March.
- Jean-Charles Rochet & Philippe Chone, 1998. "Ironing, Sweeping, and Multidimensional Screening," Econometrica, Econometric Society, vol. 66(4), pages 783-826, July.
- Milgrom, Paul R & Weber, Robert J, 1982. "A Theory of Auctions and Competitive Bidding," Econometrica, Econometric Society, vol. 50(5), pages 1089-1122, September.
- Paul Milgrom & Robert J. Weber, 1981. "A Theory of Auctions and Competitive Bidding," Discussion Papers 447R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Wilson, Robert, 1991. "Erratum [Multiproduct Tariffs]," Journal of Regulatory Economics, Springer, vol. 3(2), pages 211-212, June.
- R. Preston McAfee & John McMillan & Michael D. Whinston, 1989. "Multiproduct Monopoly, Commodity Bundling, and Correlation of Values," The Quarterly Journal of Economics, Oxford University Press, vol. 104(2), pages 371-383.
- Wilson, Robert, 1991. "Multiproduct Tariffs," Journal of Regulatory Economics, Springer, vol. 3(1), pages 5-26, March.
- McAfee, R. Preston & McMillan, John, 1988. "Multidimensional incentive compatibility and mechanism design," Journal of Economic Theory, Elsevier, vol. 46(2), pages 335-354, December. Full references (including those not matched with items on IDEAS)
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: (Dana Niculescu)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.