/pdf/the-theory-of-industrial-organization-19bejph0ej.pdf

The Theory of Industrial Organization

This book provides a comprehensive introduction to modern auction theory and its important new applications. It is written by a leading economic theorist whose suggestions guided the creation of the new spectrum auction designs. Aimed at graduate students and professionals in economics, the book gives the most up-to-date treatments of both traditional theories of 'optimal auctions' and newer theories of multi-unit auctions and package auctions, and shows by example how these theories are used. The analysis explores the limitations of prominent older designs, such as the Vickrey auction design, and evaluates the practical responses to those limitations. It explores the tension between the traditional theory of auctions with a fixed set of bidders, in which the seller seeks to squeeze as much revenue as possible from the fixed set, and the theory of auctions with endogenous entry, in which bidder profits must be respected to encourage participation.

/pdf/putting-auction-theory-to-work-1bx3imoznf.pdf

Putting Auction Theory to Work

combinatorial auctions What to say and what to do when mostly your friends love reading? Are you the one that don't have such hobby? So, it's important for you to start having that hobby. You know, reading is not the force. We're sure that reading will lead you to join in better concept of life. Reading will be a positive activity to do every time. And do you know our friends become fans of combinatorial auctions as the best book to read? Yeah, it's neither an obligation nor order. It is the referred book that will not make you feel disappointed.

Combinatorial Auctions

(1987). Applied Probability and Queues. Journal of the Operational Research Society: Vol. 38, No. 11, pp. 1095-1096.

https://link.springer.com/content/pdf/10.1057%2Fjors.1987.184.pdf

Applied Probability and Queues

This paper outlines recently developed techniques for estimating the primitives needed to empirically analyze equilibrium interactions and their implications in oligopolistic markets. It is divided into an introduction and three sections; a section on estimating demand functions, a section on estimating production functions, and a section on estimating "dynamic" parameters (parameters estimated through their implications on the choice of controls which determine the distribution of future profits). The introduction provides an overview of how these primitives are used in typical I.O. applications, and explains how the individual sections are structured. The topics of the three sections have all been addressed in prior literature. Consequently each section begins with a review of the problems I.O. researchers encountered in using the prior approaches. The sections then continue with a fairly detailed explanation of the recent techniques and their relationship to the problems with the prior approaches. Hopefully the detail is rich enough to enable the reader to actually program up a version of the techniques and use them to analyze data. We conclude each section with a brief discussion of some of the problems with the more recent techniques. Here the emphasis is on when those problems are likely to be particularly important, and on recent research designed to overcome them when they are.

/pdf/econometric-tools-for-analyzing-market-outcomes-3fvu82sra8.pdf

Econometric Tools for Analyzing Market Outcomes

We propose an approximation method for analyzing Ericson and Pakes (1995)-style dynamic models of imperfect competition. We develop a simple algorithm for computing an “oblivious equilibrium,” in which each firm is assumed to make decisions based only on its own state and knowledge of the long run average industry state, but where firms ignore current information about competitors’ states. We prove that, as the market becomes large, if the equilibrium distribution of firm states obeys a certain “lighttail” condition, then oblivious equilibria closely approximate Markov perfect equilibria. We develop bounds that can be computed to assess the accuracy of the approximation for any given applied problem. Through computational experiments, we find that the method often generates useful approximations for industries with hundreds of firms and in some cases even tens of firms.

/pdf/markov-perfect-industry-dynamics-with-many-firms-h7vy7hq61n.pdf

Markov perfect industry dynamics with many firms

Ad exchanges are emerging Internet markets where advertisers may purchase display ad placements, in real time and based on specific viewer information, directly from publishers via a simple auction mechanism. Advertisers join these markets with a prespecified budget and participate in multiple second-price auctions over the length of a campaign. This paper studies the competitive landscape that arises in ad exchanges and the implications for publishers' decisions. The presence of budgets introduces dynamic interactions among advertisers that need to be taken into account when attempting to characterize the bidding landscape or the impact of changes in the auction design. To this end, we introduce the notion of a fluid mean-field equilibrium FMFE that is behaviorally appealing and computationally tractable, and in some important cases, it yields a closed-form characterization. We establish that an FMFE approximates well the rational behavior of advertisers in these markets. We then show how this framework may be used to provide sharp prescriptions for key auction design decisions that publishers face in these markets. In particular, we show that ignoring budgets, a common practice in this literature, can result in significant profit losses for the publisher when setting the reserve price.

This paper was accepted by Dimitris Bertsimas, optimization.

/pdf/repeated-auctions-with-budgets-in-ad-exchanges-5d1gkz14bv.pdf

Repeated Auctions with Budgets in Ad Exchanges: Approximations and Design

We propose an approximation method for analyzing Ericson and Pakes (1995)-style dynamic models of imperfect competition. We develop a simple algorithm for computing an "oblivious equilibrium," in which each firm is assumed to make decisions based only on its own state and knowledge of the long run average industry state, but where firms ignore current information about competitors' states. We prove that, as the market becomes large, if the equilibrium distribution of firm states obeys a certain "light-tail" condition, then oblivious equilibria closely approximate Markov perfect equilibria. We develop bounds that can be computed to assess the accuracy of the approximation for any given applied problem. Through computational experiments, we find that the method often generates useful approximations for industries with hundreds of firms and in some cases even tens of firms.

/pdf/markov-perfect-industry-dynamics-with-many-firms-59v5jxnhh1.pdf

Markov Perfect Industry Dynamics with Many Firms

We propose a mean-field approximation that dramatically reduces the computational complexity of solving stochastic dynamic games. We provide conditions that guarantee our method approximates an equilibrium as the number of agents grow. We then derive a performance bound to assess how well the approximation performs for any given number of agents. We apply our method to an important class of problems in applied microeconomics. We show with numerical experiments that we are able to greatly expand the set of economic problems that can be analyzed computationally.

/pdf/oblivious-equilibrium-a-mean-field-approximation-for-large-2ohzisdgnq.pdf

Oblivious Equilibrium: A Mean Field Approximation for Large-Scale Dynamic Games

This paper develops a game theoretic model based on a two-sided market framework to investigate the net neutrality debate. In particular, we consider investment incentives of Internet Service Providers (ISPs) under a neutral and non-neutral network regimes. In our model, two interconnected ISPs compete over quality and prices for heterogeneous content providers (CPs) and heterogeneous consumers. We consider two definitions of a non-neutral network: in the first, ISPs charge access fees to off-network CPs; in the second, ISPs offer "priority lanes''. In the neutral regime, connecting to a single ISP allows a CP to communicate with all consumers and all CPs obtain the same quality of service. With a combination of theoretical and numerical results we find that under both definitions ISPs' quality-investment levels are driven by the trade-off they make between softening price competition on the consumer side and increasing revenues extracted from CPs. Specifically, in the non-neutral regime, because it is easier to extract surplus through appropriate CP pricing, ISPs' investment levels are larger. Because CP quality is enhanced by the quality of ISPs, larger investment levels imply that CPs' revenues increase. Similarly, consumer surplus increases as well. The main insight resulting from our model is that social welfare is larger in the non-neutral regime. Our results highlight important mechanisms related to ISPs' investments that play a key role in market outcomes, providing useful insights that enrich the net neutrality debate.

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID2168893_code336339.pdf?abstractid=1641359&mirid=1&type=2

Gabriel Y. Weintraub

Papers

Markov perfect industry dynamics with many firms

Repeated Auctions with Budgets in Ad Exchanges: Approximations and Design

Markov Perfect Industry Dynamics with Many Firms

Oblivious Equilibrium: A Mean Field Approximation for Large-Scale Dynamic Games

Investment in Two Sided Markets and the Net Neutrality Debate