Combinatorial clock auctions

My colleagues Jon Levin and Andy Skrzypacz have an NBER paper on combinatorial clock auctions of the kind proposed by Ausubel, Cramton and Milgrom (2006), which are becoming widely used outside of the U.S. to auction spectrum. They point to it's multiplicity of equilibria, in some of which bidders can act to raise their competitors' payments without changing their own, as a source of potential problems, some of which may have been observed in practice,

Are Dynamic Vickrey Auctions Practical?: Properties of the Combinatorial Clock Auction

Jonathan Levin, Andrzej Skrzypacz

NBER Working Paper No. 20487
Issued in September 2014
NBER Program(s):   IO 

The combinatorial clock auction is becoming increasingly popular for large-scale spectrum awards and other uses, replacing more traditional ascending or clock auctions. We describe some surprising properties of the auction, including a wide range of ex post equilibria with demand expansion, demand reduction and predation. These outcomes arise because of the way the auction separates allocation and pricing, so that bidders are asked to make decisions that cannot possibly affect their own auction outcome. Our results obtain in a standard homogenous good setting where bidders have well-behaved linear demand curves, and suggest some practical difficulties with dynamic implementations of the Vickrey auction.