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Prefix-Based Collection Auction: A Mechanism against Market Power and Collusion

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  • Taubman, Dmitriy

Abstract

We introduce a new collection auction mechanism for selling multiple identical items to a single winner—the Prefix-Based Collection Auction. The auction restricts the winner to a prefix of their bids and imposes a payment rule based on both an internal prefix sum and an external second price. This dual structure offers strong protection against both market power and bidder collusion, while maintaining intuitive and truthful bidding behavior. The mechanism is robust, simple to implement, and has potential applications in art-collection markets, online advertising, and other environments where bundle demand is critical.

Suggested Citation

  • Taubman, Dmitriy, 2025. "Prefix-Based Collection Auction: A Mechanism against Market Power and Collusion," MPRA Paper 125907, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:125907
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    References listed on IDEAS

    as
    1. Edward Clarke, 1971. "Multipart pricing of public goods," Public Choice, Springer, vol. 11(1), pages 17-33, September.
    2. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, March.
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    JEL classification:

    • A10 - General Economics and Teaching - - General Economics - - - General
    • A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists

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