Optimal two-object auctions with synergies

Domenico Menicucci

ICER Working Papers - Applied Mathematics Series from ICER - International Centre for Economic Research

Abstract: We design the revenue-maximizing auction for two goods when each buyer has bi-dimensional private information and a superadditive utility function (i.e., a synergy is generated if a buyer wins both goods). In this setting the seller is likely to allocate the goods inefficiently with respect to an environ-ment with no synergies. In particular, if the synergy is large then it may occur that a buyer’s valuations for the goods weakly dominate the valuations of another buyer and the latter one receives the bundle. We link this fact, which contrasts with the results for a setting without synergies, to "non-regular" one-good models.

Keywords: Multiple-unit Auctions; Multi-dimensional Screening; Bundling (search for similar items in EconPapers)
JEL-codes: D44 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2001-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

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Related works:
Journal Article: Optimal two-object auctions with synergies (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:icr:wpmath:18-2001

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