Lawrence M Ausubel and Peter Cramton. The optimality of being efficient. Technical report, University of Maryland, 1998.  Home/Search   Document Details and Download   Summary   Related Articles   Check

....complements and or substitutes and agents have quite general preferences [53] Our primary goal is allocative efficiency, to al locate items across agents to maximize total utility. In some cases this goal is compatible with revenue maximization, for example when there is a perfect resale market [7], but in general it is well known that revenue maximization is incompatible with efficiency [40] A brief discussion of the revenue properties of zBEA vis a vie competing ascending price combinatorial auction designs is made in Section 6. In this section we first define the combinatorial ....

Lawrence M Ausubel and Peter Cramton. The optimality of being efficient. Technical report, University of Maryland, 1998.

....all admitted receivers get the same data at the same rate. In many practical settings, the service provider would be more concerned with selecting the speed and the pricing method that will generate the greatest profit (revenue minus cost) However, there are arguments in the economics literature [2] that suggest that socially efficient mechanisms will generate as much revenue as those that try to maximize revenue because efficient mechanisms will attract greater participation and competition. Economic arguments aside, in this paper we are concerned with removing the incentive to ....

Lawrence M. Ausubel and Peter Cramton. The optimality of being efficient. May 1998.

....is that the license holder exercises its substantial market power in the resale of the license (Cramton et al. 1987) For this reason, it is important to get the assignment right the first time. Moreover, efficient auctions tend to raise substantial revenues, especially when resale is possible (Ausubel and Cramton 1999). Much of the research on spectrum auction design has focused on the Personal Communication Services (PCS) auctions in the US. Below I summarize several of the important issues, and the FCC s ultimate conclusion. These issues are discussed in several papers (e.g. Cramton 1997, McMillan 1994, ....

Ausubel, La wrence M. and Peter Cramton (1999), "The Optimality of Being Efficient," Working Paper, University of Maryland.

....the primary source of inefficiency stems from the exercise of market power in thin markets. Illiquidity increases the risk that some bidders may have market power in certain circumstances. 5 See Nordhaus (1994) Cline(1992) Jorgenson and Wilcoxen (1992) and Manne and Richels (1990) 6 Ausubel and Cramton (1998) prove that an efficient auction maximizes revenues if resale markets are efficient. 4 To increase liquidity in this market, all permits are the same after their date of issue, and permits are bankable; that is, a permit issued for the year 2000 can be used in any later year. There is no ....

Ausubel, Lawrence M. and Peter Cramton (1998), "The Optimality of Being Efficient," Working Paper, University of Maryland.

....and an ex post equilibrium with interdependent values (a bidder s value also depends on the private information of other bidders) Reserve pricing does not damage the desirable features of a Vickrey auction. An important motivation for assigning goods efficiently is the possibility of resale (Ausubel and Cramton 1999). Although in an optimal auction the seller typically has an incentive to misassign goods, this incentive is undermined when the seller cannot prevent resale. Bidders anticipate the resale market and adjust their bids accordingly. Here we show that in an auction followed by resale, truthful ....

....game, so long as the resale game satisfies a natural extension of individual rationality. When resale markets are perfect, so that all gains from trade among the bidders are exhausted in the resale market, then an upper bound on seller revenues is given by the resale constrained auction program (Ausubel and Cramton 1999). In this program, the seller can withhold quantity, but is constrained to assign efficiently the quantity sold. Here we show that the Vickrey auction with reserve pricing attains the upper bound on payoffs given by the resale constrained auction program. Faced with a perfect resale market, the ....

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Ausubel, Lawrence M. and Peter Cramton (1999), "The Optimality of Being Efficient," Working Paper, University of Maryland.

....Although revenue was not the FCC s top priority (efficiency was) it is nevertheless important for a government with distortionary taxes to raise as much money as possible from nondistortionary sources. Moreover, revenue and efficiency are closely linked in markets where resale is permitted (Ausubel and Cramton 1999). Collusion can be mitigated in the simultaneous ascending auction by appropriately enhancing the particular rules of the auction. For example, limiting bids to three significant digits eliminates code bidding and makes bidding easier, since bidders do not have to waste resources determining what ....

Ausubel, Lawrence M. and Peter Cramton. 1999. "The Optimality of Being Efficient," Working Paper, University of Maryland.

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Lawrence M Ausubel and Peter Cramton. The optimality of being efficient. Technical report, University of Maryland, 1998.

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