Multidimensional mechanism design for auctions with externalities

Article Abstract:

A design for multidimensional incentive compatible mechanism similar to that for a one-dimensional mechanism is developed for auctions with externalities. After characterizing incentive compatible and individually rational auction mechanisms, optimal mechanisms that allow maximization of the expected utility of the seller are derived in the constrained class of standard auction. The participation constraint applies to a single 'critical' type only although reservation utilities are described as being endogenous and type-dependent.

Econometrics & Model Building, Analysis, Economics, Econometrics, Externalities (Economics), Auctions, Business models

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How (not) to sell nuclear weapons

Article Abstract:

Optimal selling strategies for situations in which the result of the sale affects the future interactions of the sellers and the buyers are analyzed. A revenue-optimizing auction for the seller is developed. Findings indicate that outside options and participation restrictions are endogenous, the seller extracts surplus also from agents who do not get the auctioned object, and it is better for the seller if he does not sell at all if externalities are much bigger than valuations.

Purchasing, Economic aspects, Negotiation, Negotiations, Selling

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Strategic nonparticipation

Article Abstract:

The avoidance by economic agents of non-anonymous asymmetric negative external effects is examined through a model of a market wherein several agents are vying for the ownership of an indivisible good. The model assumes complete knowledge of market information by the competing agents. Results show that companies have provided incentives to dampen possible negative effects. However, said effects cannot be avoided even if an agent decides to stay out of the market.

Research, Competition (Economics), Oligopolies

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