General equilibrium methodology applied to the design, implementation and performance evaluation of large, multi-market and multi-unit policy constrained auctions (Q6107374)

This paper reports design and implementation of a Victoria gaming auction mechanism to solve a complex allocation problem that involved 176 interdependent markets and prices, 18788 entitlements and 363 bidders. Social policies led to constraints on the distribution of gambling activities in a highly regulated industry. The analysis approached this problem by starting with theoretical properties of an efficient allocation, identified as the solution to a constrained surplus maximization problem in which participants have well formed, but unobserved, preferences. The authors focus on the dynamics of equilibration as driven by excess demand dynamics interpreted through an important principle, ``excess demand revealed at the margin''. Section 6 describes the dynamics behavior of the auction mechanism, characterizing the total revenues and surplus generated as bidding rounds progressed. Section 7 investigates price dynamics across markets in relation to the revealed excess demand in all other markets.