The English Auction with Differentiated Commodities

Faruk Gul, Ennio Stacchetti

    Research output: Contribution to journalArticle

    Abstract

    We study economies (with indivisibilities) that satisfy the gross substitutes (GS) condition. We define an excess demand set with the property that increasing the prices of all goods in excess demand eventually leads to the smallest Walrasian prices. This procedure is a generalization of the auction studied by G. Demange, D. Gale and M. J. Sotomayor, Polit. Econ.94 (1986), 863-872. In our auction, truthful revelation of demand is a perfect Bayesian equilibrium if the smallest Walrasian prices correspond to the Vickrey-Clarke-Groves payments. However, no dynamic auction can reveal sufficient information to implement the Vickrey mechanism if all GS preferences are allowed. Journal of Economic Literature Classification Numbers: D4, D44, D5, D51.

    Original languageEnglish (US)
    Pages (from-to)66-95
    Number of pages30
    JournalJournal of Economic Theory
    Volume92
    Issue number1
    DOIs
    StatePublished - May 2000

    ASJC Scopus subject areas

    • Economics and Econometrics

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