Citation

Discussion Paper Details

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Title: The Product-Mix Auction: a New Auction Design for Differentiated Goods

Author(s): Paul Klemperer

Publication Date: August 2009

Keyword(s): central banking, multi-object auction, simultaneous ascending auction, TARP, term auction and treasury auction

Programme Area(s): Financial Economics, Industrial Organization and Public Economics

Abstract: I describe a new static (sealed-bid) auction for differentiated goods - the "Product-Mix Auction". Bidders bid on multiple assets simultaneously, and bidtakers choose supply functions across assets. The auction yields greater efficiency, revenue, information, and trade than running multiple separate auctions. It is also often simpler to use and understand, and less vulnerable to collusion, than a simultaneous multiple round auction. I designed it after the 2007 Northern Rock bank-run to help the Bank of England fight the credit crunch; in 2008 the U.S. Treasury planned using a related design to buy "toxic assets"; it may be used to purchase electricity.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=7395

Bibliographic Reference

Klemperer, P. 2009. 'The Product-Mix Auction: a New Auction Design for Differentiated Goods'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=7395