Second Best Efficiency in Auctions

Ángel Hernando Veciana () and Fabio Michelucci
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Ángel Hernando Veciana: Universidad de Alicante
Authors registered in the RePEc Author Service: Angel Hernando-Veciana ()

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: We characterize the incentive compatible allocation that maximizes the expected social surplus in a single-unit sale when the efficient allocation is not implementable. This allocation may involve no selling when it is efficient to sell. We then show that the English auction always implements the second best allocation when there are only two bidders, but not with more than two. Our model employs a unidimensional type space with independent types and allocative externalities, but captures some features of models with multidimensional types.

Keywords: Efficiency; auctions; mechanism design (search for similar items in EconPapers)
JEL-codes: D44 D82 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2008-12
New Economics Papers: this item is included in nep-cta and nep-gth
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasad:2008-17

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