Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/92826
Authors: 
Gunay, Hikmet
Meng, Xin
Year of Publication: 
2012
Series/Report no.: 
ISER Discussion Paper, Institute of Social and Economic Research, Osaka University 848
Abstract: 
We characterize the optimal bidding strategies of local and global bidders for two heterogenous licenses in a multi-unit simultaneous ascending auction. The global bidder wants to win both licenses to enjoy synergies; therefore, she bids more than her stand-alone valuation of a license. This exposes her to the risk of losing money even when she wins all licenses. We determine the optimal bidding strategies in the presence of an exposure problem. By using simulation methods, firstt, we show the frequency of inefficient allocation in the simultaneous ascending auction. Then, we show that the Vickrey-Clarke-Groves (VCG) mechanism may generate more revenue than the simultaneous ascending auction.
Subjects: 
Multi-Unit Auctions
Vickrey Clarke Groves (VCG) mechanism
Exposure Problem
Synergies
Complementarity
JEL: 
D44
D82
Document Type: 
Working Paper

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