|
Chapter 6 Economic Theory and Auctions in the New Economy Auctions occupy a conspicuous place in the commerce of the new economy. For items ranging from inexpensive collectibles sold on the Internet to billion-dollar spectrum licenses for mobile telephony, auctions are being used increasingly to discover price and determine allocations. This chapter provides an elementary introduction to auction theory. The first part reviews single-item auctions, including the sealed-bid auctions used frequently for procurement and the ascending auctions used widely by both traditional auction houses (e.g., Sotheby’s and Christie’s) and on-line bazaars (e.g., eBay). The second part discusses the more recent innovations related to auctions of multiple items, describing the basis for auctions in the telecommunications, energy, and environmental sectors and, perhaps, pointing to the shape of things to come. |