Prefix-Based Collection Auction: A Mechanism against Market Power and Collusion

Taubman, Dmitriy (2025): Prefix-Based Collection Auction: A Mechanism against Market Power and Collusion. Published in:

Abstract

We introduce a new collection auction mechanism for selling multiple identical items to a single winner—the Prefix-Based Collection Auction. The auction restricts the winner to a prefix of their bids and imposes a payment rule based on both an internal prefix sum and an external second price. This dual structure offers strong protection against both market power and bidder collusion, while maintaining intuitive and truthful bidding behavior. The mechanism is robust, simple to implement, and has potential applications in art-collection markets, online advertising, and other environments where bundle demand is critical.

• Item Type: MPRA Paper
• Language: English
• Keywords: auctions; mechanism design; game theory; collusion resistance; market power; prefix structure
• Subjects: A - General Economics and Teaching > A1 - General Economics > A10 - General; A - General Economics and Teaching > A1 - General Economics > A11 - Role of Economics ; Role of Economists ; Market for Economists

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