Optimal allocation mechanisms with type-dependent negative externalities
This article studies auctions with negative externalities in the case of externalities depending on the agent's valuation. More precisely, it analyzes the optimal auction design for linear type-dependent negative externalities. The article characterizes the optimal allocation mechanism and shows that the allocation mechanism will depend on whether the externality is ``increasing or ``strongly decreasing in the agent's valuation. The author proves that if the externality suffered by the agent increases with his valuation, the equilibrium utility of the agent is non-monotonic in the valuation. If the externality strongly decreases with his valuation, the good might be sold to the agent with lowest valuation. The article then discusses the implementation of the optimal mechanism with sealed-bid auctions. It demonstrates that if a second-price sealed-bid auction is used, then bids are not necessarily increasing in valuations. In addition, to implement the optimal auction, the seller should opt for a bid-dependent price ceiling.
- Multidimensional mechanism design for auctions with externalities
- Optimal auctions with asymmetric financial externalities
- Countervailing incentives in allocation mechanisms with type-dependent externalities
- Allocative and informational externalities in auctions and related mechanisms
- Endogenous entry in auctions with negative externalities
- A Theory of Auctions and Competitive Bidding
- Auctions with cross-shareholdings
- Bidding for the future: Signaling in auctions with an aftermarket
- Contracting with capacity constrained suppliers
- Coordination and externalities
- Countervailing incentives in agency problems
- Countervailing incentives in allocation mechanisms with type-dependent externalities
- Efficient Auctions
- Endogenous entry in auctions with negative externalities
- Multidimensional mechanism design for auctions with externalities
- On countervailing incentives
- Optimal Auction Design
- Optimal licensing of cost-reducing innovation
- Optimal selling mechanisms with countervailing positive externalities and an application to tradable retaliation in the WTO
- Participation constraints in adverse selection models
- The role of optimal threats in auction design
- The role of optimal threats in auction design
- Optimal profit sharing mechanisms with type-dependent outside options
- Contests with multiple alternative prizes: public-good/bad prizes and externalities
- Countervailing incentives in allocation mechanisms with type-dependent externalities
- Incentives and implementation in allocation problems with externalities
- Allocative and informational externalities in auctions and related mechanisms
- Optimal allocation with costly inspection and discrete types under ambiguity
- Mechanism and network design with private negative externalities
- Screening while controlling an externality
- Optimal selling mechanisms with countervailing positive externalities and an application to tradable retaliation in the WTO
- Optimal mechanism design when both allocative inefficiency and expenditure inefficiency matter
- An assignment problem with interdependent valuations and externalities
- Towards data auctions with externalities
- Optimal auctions with asymmetric financial externalities
- Optimal selling mechanisms with crossholdings
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