The condominium problem; auctions for substitutes

Roberto Burguet

Review of Economic Design, 2005, vol. 9, issue 2, 73-90

Abstract: This paper considers the problem of designing selling procedures for substitutes (like condominium units). Oral, ascending auctions for the right to choose are efficient. This is a common type of auction used for the sale of real estate. Efficiency is not optimal from the seller’s viewpoint. An optimal procedure distorts the right-to-choose auction to favor in late rounds bidders whose preferred object has already been sold. This optimal auction is complex. A revenue improving departure from efficiency can be achieved by simply auctioning all the rights to choose before any of them is exerted. Copyright Springer-Verlag Berlin/Heidelberg 2005

Keywords: Auctions; right-to-choose; substitutes (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (13)

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DOI: 10.1007/s10058-005-0121-2

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