Optimal allocation mechanisms with type-dependent negative externalities |
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Authors: | Isabelle Brocas |
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Institution: | 1. Department of Economics, University of Southern California, 3620 S. Vermont Ave., Los Angeles, CA, 90089-0253, USA 2. CEPR, London, UK
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Abstract: | I analyze optimal auction design in the presence of linear type-dependent negative externalities. I characterize the properties of the optimal mechanism when externalities are “strongly decreasing” and “increasing” in the agent’s valuation and I discuss its implementation with sealed-bid auctions. Interestingly, bidding strategies are not necessarily increasing in valuations, and the optimal mechanism can be implemented by setting a price ceiling instead of a reserve price. |
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