Abstract.
We design the revenue-maximizing auction for two objects when each buyer has bi-dimensional private information and a superadditive utility function (i.e., a synergy is generated if a buyer wins both goods). In this setting the seller is likely to allocate the objects inefficiently with respect to an environment with no synergies (see Armstrong, RES (2000)). In particular, the objects may be bundled too rarely or a buyer may win the bundle even though her valuations for the goods are weakly dominated by the values of another buyer.
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Received: 29 October 2001, Accepted: 29 October 2002,
JEL Classification:
D44, D82
This paper has been written while the author was a member of the Dipartimento di Statistica e Matematica Applicata alle Scienze Umane "Diego De Castro", Universitá degli Studi di Torino, Italy. Valuable comments and suggestions were provided by Antonio Cabrales, Massimo Marinacci, three anonymous referees and, especially, by Mark Armstrong. The usual disclaimer applies.
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Menicucci, D. Optimal two-object auctions with synergies. Review Economic Design 8, 143–164 (2003) (2003). https://doi.org/10.1007/s10058-003-0096-9
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DOI: https://doi.org/10.1007/s10058-003-0096-9