4 results
8 - A Practical Guide to the Combinatorial Clock Auction
- from Part II - The Combinatorial Clock Auction Designs
-
- By Lawrence M. Ausubel, Department of Economics, University of Maryland, Oleg Baranov, Department of Economics, University of Colorado Boulder
- Edited by Martin Bichler, Technische Universität München, Jacob K. Goeree, University of New South Wales, Sydney
-
- Book:
- Handbook of Spectrum Auction Design
- Published online:
- 26 October 2017
- Print publication:
- 26 October 2017, pp 170-186
-
- Chapter
- Export citation
-
Summary
Since its proposal in a 2006 academic paper, the combinatorial clock auction (CCA) has rapidly established itself as one of the leading formats for government auctions of telecommunications spectrum. Its initial implementations were for relatively small auctions and some of these applications may be viewed as experimental. However, in the past few years, usage of the CCA has gained substantial momentum. From 2012 to this writing in 2015, the CCA has been used for more than ten major spectrum auctions worldwide, allocating prime sub-1-GHz spectrum on three continents and raising approximately $20 billion in revenues (see Table 1). Despite the presence of an existing auction format—the simultaneous multiple round auction (SMRA)—which often performs reasonably well, the CCA has the potential of displacing it and becoming the new standard design choice for spectrum auctions.
The CCA design consists of a two-stage bidding process. The first stage, known as the clock rounds, is a multiple-round clock auction. In each round, the auctioneer announces prices for all items and bidders respond with quantities demanded at these prices. If aggregate demand exceeds available supply for any items, the auctioneer announces higher prices for these items in the next round. The bidding process continues until prices reach a level at which aggregate demand is less than or equal to supply for every item. The second stage, known as the supplementary round, is a sealed-bid auction process in which bidders can improve their bids made in the first stage and submit additional bids as desired for other combinations of items. Throughout the entire auction, all bids are treated as all-or-nothing package bids.
To determine winnings and associated payments, all bids placed during the clock rounds and all bids placed in the supplementary round are entered together into a standard winner determination problem (WDP). Winning packages are determined by finding an allocation that maximizes the total value (as reflected in bids) subject to feasibility constraints: each item can be sold only once and only one bid from each bidder can be selected as part of the winning allocation.
6 - The Clock-Proxy Auction: A Practical Combinatorial Auction Design
- from Part II - The Combinatorial Clock Auction Designs
-
- By Lawrence M. Ausubel, Department of Economics, University of Maryland, Peter Cramton, Department of Economics, University of Maryland, Paul R. Milgrom, Department of Economics, Stanford University
- Edited by Martin Bichler, Technische Universität München, Jacob K. Goeree, University of New South Wales, Sydney
-
- Book:
- Handbook of Spectrum Auction Design
- Published online:
- 26 October 2017
- Print publication:
- 26 October 2017, pp 120-140
-
- Chapter
- Export citation
-
Summary
Introduction
In this chapter we propose a method for auctioning many related items. A typical application is a spectrum sale in which different bidders combine licenses in different ways. Some pairs of licenses may be substitutes and others may be complements. Indeed, a given pair of licenses may be substitutes for one bidder but complements for another, and may change between substitutes and complements for a single bidder as the prices of the other licenses vary. Our proposed method combines two auction formats—the clock auction and the proxy auction—to produce a hybrid with the benefits of both.
The clock auction is an iterative auction procedure in which the auctioneer announces prices, one for each of the items being sold. The bidders then indicate the quantities of each item desired at the current prices. Prices for items with excess demand then increase, and the bidders again express quantities at the new prices. This process is repeated until there are no items with excess demand.
The ascending proxy auction is a particular package bidding procedure with desirable properties (see Ausubel and Milgrom 2002, 2006). The bidders report values to their respective proxy agents. The proxy agents iteratively submit package bids on behalf of the bidders, selecting the best profit opportunity for a bidder given the bidder's inputted values. The auctioneer then selects the provisionally winning bids that maximize revenues. This process continues until the proxy agents have no new bids to submit.
The clock-proxy auction is a hybrid auction format that begins with a clock phase and ends with a final proxy round. First, bidders directly submit bids in a clock auction, until there is no excess demand for any item. Then bidders have a single opportunity to input proxy values. The proxy round concludes the auction. All bids are kept live throughout the auction. There are no bid withdrawals. The bids of a particular bidder are mutually exclusive. There is an activity rule throughout the clock phase and between the clock phase and the proxy round.
9 - Market Design and the Evolution of the Combinatorial Clock Auction
- from Part II - The Combinatorial Clock Auction Designs
-
- By Lawrence M. Ausubel, Department of Economics, University of Maryland, Oleg Baranov, Department of Economics, University of Colorado Boulder
- Edited by Martin Bichler, Technische Universität München, Jacob K. Goeree, University of New South Wales, Sydney
-
- Book:
- Handbook of Spectrum Auction Design
- Published online:
- 26 October 2017
- Print publication:
- 26 October 2017, pp 187-194
-
- Chapter
- Export citation
-
Summary
The combinatorial clock auction (CCA) is an important recent innovation in market design. It has progressed rapidly from a 2003 academic paper to real-world adoption. In the past few years, it has been used for more major spectrum auctions worldwide than any other auction format. As such, the CCA is the first format that has the potential to eclipse the simultaneous multiple-round auction (SMRA) as the standard for spectrum auctions.
The defining characteristic of the CCA is a two-stage bidding process. The first stage is a dynamic clock auction: the auctioneer announces prices for the items in the auction; and bidders respond with quantities desired at the announced prices. Bidding in this stage progresses in multiple rounds as prices increase until aggregate demand is less than or equal to supply for every item. In the second stage, bidders have the opportunity to submit a multiplicity of supplementary bids, both to improve upon their bids from the clock rounds and to express values for other packages.
Following the second stage, the bids from both the clock rounds and the supplementary round are entered into winner determination and pricing problems. The winner determination problem treats these bids as package bids, and determines the value maximizing allocation of the items among the bidders. The pricing problem is based on second-price principles.
In most applications, there is also a third stage of bidding. Generally, several items in the auction are treated as identical during the first two stages. For example, in the European digital dividend auctions, there have generally been six distinct licenses offered in the 800 MHz band. In the auction's first two stages, bidders simply indicate quantities of “generic” 800 MHz spectrum that they wish to purchase. The third stage takes bidders’ winnings of generic spectrum as given, and bidders express values for specific 800 MHz licenses. Thus, it determines the assignment from generic spectrum to physical frequencies.
9 - Dynamic auctions in procurement
-
- By Lawrence M. Ausubel, Professor of Economics University of Maryland, USA, Peter Cramton, Professor of Economics University of Maryland, USA
- Edited by Nicola Dimitri, Università degli Studi, Siena, Gustavo Piga, Università degli Studi di Roma 'Tor Vergata', Giancarlo Spagnolo, Stockholm School of Economics
-
- Book:
- Handbook of Procurement
- Published online:
- 04 November 2009
- Print publication:
- 28 September 2006, pp 220-246
-
- Chapter
- Export citation
-
Summary
Introduction
Procurements for many related items are commonplace. Dynamic auctions have many advantages in such environments. We consider both the purchase of many related items and the purchase of many divisible goods, such as energy products or environmental allowances, or other procurement contracts. In such auctions, the bids specify quantities of each of the items: the megawatt-hours of electricity or the tons of emissions. Often, related goods are – or could be – auctioned at the same time. In electricity markets, products with several durations or locations may be auctioned together. In environmental auctions, emission reductions for each of several different pollutants or time periods may be bought at the same time. This chapter explores how procurement auctions for many divisible or indivisible goods should be conducted. Of course, the answer depends on the objective of the buyer and the bidding environment. Here we focus on a few of the important issues of auction design in a setting where the buyer cares about some combination of efficiency (procuring the goods from the lowest-cost suppliers) and minimization of the payment for purchasing the goods. Our purpose is to motivate a sensible design in a realistic environment, rather than to prove the optimality of a particular design, which would require more restrictive assumptions than we care to make.