An Efficient Dynamic Auction for Heterogeneous Commodities
Ausubel, Lawrence M. 2006. "An Efficient Dynamic Auction for Heterogeneous Commodities."
American Economic Review,
This article proposes a new dynamic design for auctioning multiple heterogeneous
commodities. An auctioneer wishes to allocate K types of commodities among n
bidders. The auctioneer announces a vector of current prices, bidders report
quantities demanded at these prices, and the auctioneer adjusts the prices. Units are
credited to bidders at the current prices as their opponents' demands decline, and
the process continues until every commodity market clears. Bidders, rather than
being assumed to behave as price-takers, are permitted to strategically exercise
their market power. Nevertheless, the proposed auction yields Walrasian equilibrium
prices and, as from a Vickrey-Clarke-Groves mechanism, an efficient allocation.
Article Full-Text Access
Ausubel, Lawrence M.