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The condominium problem; auctions for substitutes

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  • Roberto Burguet

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Abstract

This paper considers the problem of designing selling procedures for substitutes (like condominium units). Oral, ascending auctions for the right to choose are efficient. This is a common type of auction used for the sale of real estate. Efficiency is not optimal from the seller’s viewpoint. An optimal procedure distorts the right-to-choose auction to favor in late rounds bidders whose preferred object has already been sold. This optimal auction is complex. A revenue improving departure from efficiency can be achieved by simply auctioning all the rights to choose before any of them is exerted. Copyright Springer-Verlag Berlin/Heidelberg 2005

Suggested Citation

  • Roberto Burguet, 2005. "The condominium problem; auctions for substitutes," Review of Economic Design, Springer;Society for Economic Design, vol. 9(2), pages 73-90, April.
  • Handle: RePEc:spr:reecde:v:9:y:2005:i:2:p:73-90
    DOI: 10.1007/s10058-005-0121-2
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    File URL: http://hdl.handle.net/10.1007/s10058-005-0121-2
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    Citations

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    Cited by:

    1. Sandro Brusco & Giuseppe Lopomo & Leslie M. Marx, 2011. "The Economics of Contingent Re-auctions," American Economic Journal: Microeconomics, American Economic Association, vol. 3(2), pages 165-193, May.
    2. Harris Hollans & Richard Martin & Henry Munneke, 2013. "Measuring Price Behavior in New Residential Subdivisions," The Journal of Real Estate Finance and Economics, Springer, vol. 47(2), pages 227-242, August.
    3. Kfir Eliaz, 2003. "Creating competition out of thin air: Market thickening and right-to-choose auctions," Theory workshop papers 658612000000000047, UCLA Department of Economics.
    4. Maarten C. W. Janssen & Vladimir A. Karamychev & Emiel Maasland, 2010. "Simultaneous Pooled Auctions with Multiple Bids and Preference Lists," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 166(2), pages 286-298, June.
    5. Jonathan E. Alevy & Julianna Butler & Michael Price, 2016. "Multi-good Demand in Bidder's Choice Auctions: Experimental Evidence from the Lab and the Field," Working Papers 2016-01, University of Alaska Anchorage, Department of Economics.
    6. Ronald M. Harstad, 2007. "Does a Seller Really Want Another Bidder?," Working Papers 0711, Department of Economics, University of Missouri.
    7. Burguet, Roberto, 2007. "Right to choose in oral auctions," Economics Letters, Elsevier, vol. 95(2), pages 167-173, May.
    8. Sarah Parlane, 2008. "Auctioning Horizontally Differentiated Items," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 33(2), pages 113-128, September.
    9. Eliaz, Kfir & Offerman, Theo & Schotter, Andrew, 2008. "Creating competition out of thin air: An experimental study of right-to-choose auctions," Games and Economic Behavior, Elsevier, vol. 62(2), pages 383-416, March.

    More about this item

    Keywords

    Auctions; right-to-choose; substitutes;

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