New Publication from the Chair of Economics esp. Microeconomics


Article on combinatorial auctions published

The article "Competing Combinatorial Auctions" has been accepted for publication by Information Systems Research and published online. The article was written by Thomas Kittsteiner (Chair of Microeconomics) in collaboration with Marion Ott (ZEW Mannheim, formerly RWTH Aachen) and Richard Steinberg (London School of Economics).

Combinatorial auctions are auctions in which bids can also be placed for packages of items rather than just for individual items. These auctions are generally beneficial to both auctioneers and bidders because they allow bidders to express synergy for items.

In recent years, combinatorial auctions and online market platforms with competing auctioneers have emerged. However, combinatorial auctions are largely not offered on these platforms. These research results provide a possible explanation for this. It is shown that competition between auctioneers can reduce the attractiveness of combinatorial auctions. Specifically, it is shown that auctioneers can limit competitive pressure among themselves if they allow bids only for certain packages, and these packages differ from auctioneer to auctioneer. This leads to market segmentation with respect to the auction used. Different auctioneers, even if they auction the same goods, allow bids only on certain packages, which differ between auctioneers. This increases the revenue of competing auctioneers even if, in otherwise comparable situations, a monopolistic auctioneer would not impose restrictions on combinatorial auctions.

This is relevant for the design of online market platforms. It implies that it need not be advantageous for an online market platform with multiple competing sellers offering their products through auctions to offer combinatorial auctions to sellers as a design option.