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A Combinatorial Auction with Multiple Winners for Universal Service

Author

Listed:
  • Frank Kelly

    () (University of Cambridge, Statistical Laboratory, Cambridge, England CB2 1SB)

  • Richard Steinberg

    () (University of Cambridge, The Judge Institute, Cambridge, England CB2 1AG)

Abstract

We describe a discrete-time auction procedure called PAUSE (Progressive Adaptive User Selection Environment) for use in assigning COLR (Carrier of Last Resort) responsibility for universal service. The auction incorporates synergies by permitting all combinatorial bids, is transparent to the bidders, allows for multiple winners, and minimizes the possibility of bidder collusion. The procedure is computationally tractable for the auctioneer and thus very efficient to run. The inherent computational complexity of combinatorial bidding cannot be eliminated. However, in this auction the computational burden of evaluating synergies rests with the bidders claiming those synergies, while the auctioneer simply checks that a bid is valid.

Suggested Citation

  • Frank Kelly & Richard Steinberg, 2000. "A Combinatorial Auction with Multiple Winners for Universal Service," Management Science, INFORMS, vol. 46(4), pages 586-596, April.
  • Handle: RePEc:inm:ormnsc:v:46:y:2000:i:4:p:586-596
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    File URL: http://dx.doi.org/10.1287/mnsc.46.4.586.12054
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Affuso, Luisa, 2003. "Auctions of rail capacity?," Utilities Policy, Elsevier, vol. 11(1), pages 43-46, March.
    2. Tuomas Sandholm & Subhash Suri & Andrew Gilpin & David Levine, 2005. "CABOB: A Fast Optimal Algorithm for Winner Determination in Combinatorial Auctions," Management Science, INFORMS, vol. 51(3), pages 374-390, March.
    3. Ahlert, Klaus-Henning & Corsten, Hans & Gössinger, Ralf, 2009. "Capacity management in order-driven production networks--A flexibility-oriented approach to determine the size of a network capacity pool," International Journal of Production Economics, Elsevier, vol. 118(2), pages 430-441, April.
    4. Hur, Daesik & Mabert, Vincent A. & Hartley, Janet L., 2007. "Getting the most out of reverse e-auction investment," Omega, Elsevier, vol. 35(4), pages 403-416, August.
    5. Lunander, Anders & Lundberg, Sofia, 2009. "Do Combinatorial Procurement Auctions Lower Cost? - An Empirical Analysis of Public Procurement of Multiple Contracts," Umeå Economic Studies 776, Umeå University, Department of Economics, revised 16 Sep 2009.
    6. R. H. Kwon & G. Anandalingam & L. H. Ungar, 2005. "Iterative Combinatorial Auctions with Bidder-Determined Combinations," Management Science, INFORMS, vol. 51(3), pages 407-418, March.
    7. Regan, A C & Song, Jiongjiong, 2003. "Combinatorial Auctions for Transportation Service Procurement: The Carrier Perspective," University of California Transportation Center, Working Papers qt7sq003mj, University of California Transportation Center.
    8. Blumrosen, Liad & Nisan, Noam, 2010. "Informational limitations of ascending combinatorial auctions," Journal of Economic Theory, Elsevier, vol. 145(3), pages 1203-1223, May.
    9. Chiang, Eric P. & Hauge, Janice A., 2013. "The impact of non-neutral federal regulatory policy on competition," Telecommunications Policy, Elsevier, vol. 37(11), pages 1142-1149.
    10. repec:spr:infosf:v:17:y:2015:i:5:d:10.1007_s10796-014-9491-8 is not listed on IDEAS
    11. Aleksandar Pekev{c} & Michael H. Rothkopf, 2003. "Combinatorial Auction Design," Management Science, INFORMS, vol. 49(11), pages 1485-1503, November.
    12. Damian R. Beil & Lawrence M. Wein, 2003. "An Inverse-Optimization-Based Auction Mechanism to Support a Multiattribute RFQ Process," Management Science, INFORMS, vol. 49(11), pages 1529-1545, November.
    13. G. Anandalingam & Robert W. Day & S. Raghavan, 2005. "The Landscape of Electronic Market Design," Management Science, INFORMS, vol. 51(3), pages 316-327, March.
    14. Jérémie Gallien & Lawrence M. Wein, 2005. "A Smart Market for Industrial Procurement with Capacity Constraints," Management Science, INFORMS, vol. 51(1), pages 76-91, January.
    15. Rajiv D. Banker & Robert J. Kauffman, 2004. "50th Anniversary Article: The Evolution of Research on Information Systems: A Fiftieth-Year Survey of the Literature in Management Science," Management Science, INFORMS, vol. 50(3), pages 281-298, March.
    16. Park, Sunju & Rothkopf, Michael H., 2005. "Auctions with bidder-determined allowable combinations," European Journal of Operational Research, Elsevier, vol. 161(2), pages 399-415, March.
    17. Teich, Jeffrey E. & Wallenius, Hannele & Wallenius, Jyrki & Koppius, Otto R., 2004. "Emerging multiple issue e-auctions," European Journal of Operational Research, Elsevier, vol. 159(1), pages 1-16, November.
    18. Avenali, Alessandro, 2009. "Exploring the VCG mechanism in combinatorial auctions: The threshold revenue and the threshold-price rule," European Journal of Operational Research, Elsevier, vol. 199(1), pages 262-275, November.

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