Low-Bid Auction Versus High-Bid Auction For Siting Noxious Facilities In a Two-City Region: An Exact Approach

Abstract : Two auctions have been proposed in the literature for siting noxious facilities: the high-bid and the low-bid auctions. In this paper, we pursue the analysis of these auctions made by O'Sullivan (1993), where he concludes that the high-bid auction has the edge over the low-bid auction. We point out that O'Sullivan has made an approximation for the expected value of the compensation obtained with the high-bid auction, and we show how to obtain the exact value. We discuss a paradox linked with O'Sullivan's result, which mitigates his conclusions, and we show that with exact compensation, the high-bid auction mechanism is indeed far superior to the low-bid auction.
Type de document :
Article dans une revue
Anales de Estudios Económicos y Empresariales, Universidad de Valladolid, 2007, XVII, pp.43-57
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https://hal.inria.fr/inria-00411490
Contributeur : Alain Jean-Marie <>
Soumis le : jeudi 27 août 2009 - 16:45:04
Dernière modification le : jeudi 24 mai 2018 - 15:59:21

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  • HAL Id : inria-00411490, version 1

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Alain Jean-Marie, Nicolas Marchetti, Mabel Tidball. Low-Bid Auction Versus High-Bid Auction For Siting Noxious Facilities In a Two-City Region: An Exact Approach. Anales de Estudios Económicos y Empresariales, Universidad de Valladolid, 2007, XVII, pp.43-57. 〈inria-00411490〉

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