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The Handbook of Market Design$
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Nir Vulkan, Alvin E. Roth, and Zvika Neeman

Print publication date: 2013

Print ISBN-13: 9780199570515

Published to Oxford Scholarship Online: January 2014

DOI: 10.1093/acprof:oso/9780199570515.001.0001

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The Product‐Mix Auction

The Product‐Mix Auction

A New Auction Design for Differentiated Goods

Chapter:
(p.268) (p.269) Chapter 10 The Product‐Mix Auction
Source:
The Handbook of Market Design
Author(s):

Paul Klemperer

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780199570515.003.0011

This chapter discusses the ‘product-mix’ auction, which was first developed for the Bank of England. The design is straightforward in concept — each bidder can make one or more bids, and each bid contains a set of mutually exclusive offers. Each offer specifies a price for a quantity of a specific ‘variety’. The auctioneer looks at all the bids and then selects a price for each ‘variety’. From each bid offered by each bidder, the auctioneer accepts (only) the offer that gives the bidder the greatest surplus at the selected prices, or no offer if all the offers would give the bidder negative surplus. All accepted offers for a variety pay the same (uniform) price for that variety.

Keywords:   auctions, Bank of England, financial crisis, differentiated goods, bidders, offers

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