Working Paper: NBER ID: w20487
Authors: Jonathan Levin; Andrzej Skrzypacz
Abstract: The combinatorial clock auction is becoming increasingly popular for large-scale spectrum awards and other uses, replacing more traditional ascending or clock auctions. We describe some surprising properties of the auction, including a wide range of ex post equilibria with demand expansion, demand reduction and predation. These outcomes arise because of the way the auction separates allocation and pricing, so that bidders are asked to make decisions that cannot possibly affect their own auction outcome. Our results obtain in a standard homogenous good setting where bidders have well-behaved linear demand curves, and suggest some practical difficulties with dynamic implementations of the Vickrey auction.
Keywords: Combinatorial Clock Auction; Dynamic Vickrey Auction; Spectrum Auctions
JEL Codes: D44; D47; D82; L51; L96
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| CCA structure (G52) | bidder behavior (D44) |
| CCA structure (G52) | ex post equilibria (D51) |
| ex post equilibria (D51) | demand expansion (O42) |
| ex post equilibria (D51) | demand reduction (R22) |
| ex post equilibria (D51) | predation (Q57) |
| bidder behavior (D44) | bidding is truthful (D44) |
| bidding is truthful (D44) | outcomes are efficient (D61) |
| bidders resolving indifference (D44) | predatory bidding (D44) |
| predatory bidding (D44) | skewed allocations (D30) |
| bidders raising each other's prices (D44) | demand reduction (R22) |
| bidders raising each other's prices (D44) | inefficiencies (D61) |
| bidders making correct decisions (D44) | efficient outcomes (D61) |