Theory and Policy Seminar, Series 214

National Academy of Development and Strategy (NADS), RUC

Theory and Policy Seminar, Series 214

Optimal linear-payment auction design with aftermarket collaboration

Reported by: XU Xinyi (Lingnan College Sun Yat-sen University)

Moderator: QIN Cong (National Academy of Development and Strategy, Renmin University of China)

Time: Jun 6, 2025  15:30-17:00

Venue: Room 1133, 11th Floor, Lide Building

Abstract:

This paper investigates optimal auction design with linear payments in scenarios where the seller and winning bidder collaborate post-auction, focusing on the divergence in the "leading effect." This divergence reflects whether the seller or bidder drives value creation. We model revenue as a multiplicative function of productivity and effort, analyzing winner-led and seller-led collaboration scenarios. A double moral hazard problem arises due to non-contractible post-auction actions. We characterize the optimal auction with linear payments (revenue-sharing and cash) under both scenarios and implement the optimal mechanism via an ascending auction.