Low-Bid Auction Versus High-Bid Auction For Siting Noxious Facilities In a Two-City Region: An Exact Approach - INRAE - Institut national de recherche pour l’agriculture, l’alimentation et l’environnement Accéder directement au contenu
Article Dans Une Revue Anales de Estudios Económicos y Empresariales Année : 2007

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

Résumé

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.
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Dates et versions

inria-00411490 , version 1 (27-08-2009)

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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, 2007, XVII (17), pp.43-57. ⟨inria-00411490⟩
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