Unconditional competitive auctions with copy and budget constraints

This paper investigates a new auction model in which bidders have both copy and budget constraints. The new model has extensive and interesting applications in auctions of online ad-words, software licenses, etc. We consider the following problem: Suppose all the participators are rational, how to allocate the objects at what price so as to guarantee auctioneer's high revenue, and how high it is. We introduce a new kind of mechanisms called win-win mechanisms and present the notion of unconditional competitive auctions. A notably interesting property of win-win mechanisms is that each bidder's self-interested strategy brings better utility not only to himself but also to the auctioneer. Then we present win-win mechanisms for multi-unit auctions with copy and budget constraints. We prove that these auctions are unconditional competitive under the situation of both limited and unlimited supply. © 2006 Springer-Verlag