The English Auction with Differentiated Commodities

Faruk Gul, Ennio Stacchetti

Research output: Contribution to journalArticle

142 Scopus citations

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 1 2000

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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