First Price Package Auction with Many Traders

Abstract

This paper studies a first price package auction with many sellers in addition to many buyers in a decentralized networked market. We first show that the set of equilibrium payoffs with profit-target strategies is equal to a bidder optimal core. We then show that for buyers, the equilibrium payoff vector is Pareto-dominated by the VCG payoff vector, but Pareto-dominates theWalrasian competitive equilibrium payoff vector. This contrasts with a package auction with a single seller, in which it is shown that the unique equilibrium payoff vector is equal to the VCG payoff vector supported by a Walrasian pricing if goods are substitute. Finally, we discuss coalition-proofness of equilibria and stability of networks.