Agri-environmental auctions with synergies

Auctions are increasingly used in agri-environmental contracting. However, the issue of synergy effect between agri-environmental measures has been consistently overlooked, both by decision-makers and by the theoretical literature on conservation auction. Based on laboratory experiments, the objective of this paper is to compare the performance of different procurement auction designs (simultaneous, sequential and combinatorial) in the case of multiple heterogeneous units where bidders may potentially want to sell more than one unit and where their supply cost structure displays positive synergies. The comparison is made by using two performance criteria: budget efficiency and allocative efficiency. We also test if performance results are affected by information feedback to bidders after each auction period. Finally we explain performance results by the analysis of bidding behaviour in the three mechanisms.

Spectrum Auctions

Auctions have emerged as the primary means of assigning spectrum licenses to companies wishing to provide wireless communication services. Since July 1994, the Federal Communications Commission (FCC) has conducted 33 spectrum auctions, assigning thousands of licenses to hundreds of firms. Countries throughout the world are conducting similar auctions. I review the current state of spectrum auctions. Both the design and performance of these auctions are addressed.Auctions, Spectrum Auctions, Multiple Item Auctions

Competition Between Auctions

Even though auctions are capturing an increasing share of commerce, they are typically treated in the theoretical economics literature as isolated. That is, an auction is typically treated as a single seller facing multiple buyers or as a single buyer facing multiple sellers. In this paper, we review the state of the art of competition between auctions. We consider three different types of competition: competition between auctions, competition between formats, and competition between auctioneers vying for auction traffic. We highlight the newest experimental, statistical and analytical methods in the analysis of competition between auctions.auctions, bidding, competition, auction formats, auction houses

Putting auction theory to work : the simultaneous ascending auction

The"simultaneous ascending auction"was first introduced in 1994 to sell licenses to use bands of radio spectrum in the United States. Much of the attention devoted to the auction came from its role in reducing federal regulation of the radio spectrum and allowing market values, rather than administrative fiat, to determine who would use the spectrum resource. Several parts of economic theory proved helpful in designing the rules for simultaneous ascending auction and in thinking about how the design might be improved and adapted for new applications. After briefly reviewing the major rules of the auction in section 2, the author turns in section 3 to an analysis based on tatonnement theory, which regards the auction as a mechanism for discovering an efficient allocation and its supporting prices. The analysis reveals a fundamental difference between situations in which the licenses are mutual substitutes and others in which the same licenses are sometimes substitutes and sometimes complements. Section 4 is a selective account of some applications of game theory to evaluating the simultaneous ascending auction design for spectrum sales. Results like those reported in section 3 have led to renewed interest in auctions in which bids for license packages are permitted. In section 5, the author uses game theory to analyze the biases in a leading proposal for dynamic combinatorial bidding. Section 6 briefly answers two additional questions that economists often ask about auction design: If trading of licenses after the auction is allowed, why does the auction form matter at all for promoting efficient license assignments? Holding fixed the quantity of licenses to be sold, how sharp is the conflict between the objectives of assigning licenses efficiently and obtaining maximum revenue? Section 7 concludes.Economic Theory&Research,International Terrorism&Counterterrorism,Markets and Market Access,Environmental Economics&Policies,Labor Policies,Markets and Market Access,Access to Markets,Economic Theory&Research,Environmental Economics&Policies,International Terrorism&Counterterrorism

Using priced options to solve the exposure problem in sequential auctions

We propose a priced options model for solving the exposure problem of bidders with valuation synergies participating in a sequence of online auctions. We consider a setting in which complementary-valued items are offered sequentially by different sellers, who have the choice of either selling their item directly or through a priced option. In our model, the seller fixes the exercise price for this option, and then sells it through a first-price auction. We analyze this model from a decision-theoretic perspective and we show, for a setting where the competition is formed by local bidders (which desire a single item), that using options can increase the expected profit for both sides. Furthermore, we derive the equations that provide minimum and maximum bounds between which the bids of the synergy buyer are expected to fall, in order for both sides of the market to have an incentive to use the options mechanism. Next, we perform an experimental analysis of a market in which multiple synergy buyers are active simultaneously. We show that, despite the extra competition, some synergy buyers may benefit, because sellers are forced to set their exercise prices for options at levels which encourage participation of all buyers.</jats:p

Use of auctions in allocation of radio spectrum

The advancement of wireless applications and emergence of new technologies over the past decades has increased the demand for spectrum licenses. This has also increased the complementary nature of licenses reducing the effectiveness of auction mechanisms previously used in spectrum allocation. This especially affects the popular SMRA model which has produced good results in the past, but has poor ability to deal with complementary products. Therefore new auction mechanisms must be developed. This thesis focuses on theoretical analysis of the most prominent spectrum auction model called the combinatorial clock auction model. CCA model’s biggest advantage over other models is its ability to deal with complementary licenses which eliminates the exposure risk and helps the government to reach efficient allocation of radio spectrum. Due to the complexity of the model, the previously popular SMRA and ascending clock auction models will have their applications in the future, but CCA is likely to outperform them in more complex settings. Empirical results show that CCA is producing good outcomes but as the number of licenses grows the auction rules require tweaking in order to maintain the high efficiency

Sequential auction and auction design

Often an auction designer has the option of selling, or purchasing, those lots available in one auction or a sequence of auctions. In addition, bidder opportunities will not be static, in part due to arrival of information, but also because bidders can face deadlines for making decisions. This paper examines the optimal decision about how to divide what is available over time.sequential auctions