Three Essays on Auctions and Mechanism Design

The dissertation book is composed of three essays:Essay 1: Optimal Use of Rewards as Commitment Device when Bidding is CostlyEssay 2: License Auctions with Exit (and Entry) Options: Alternative Remedies for the Exposure ProblemEssay 3: License Auctions with Externalities and the Option of Re-tradeEssay 1 develops a mechanism using rewards as an indirect commitment device in the framework of a common value procurement auction. The main finding of this essay is that the optimal reward implements a short-list of size two, when the number of bidders is sufficiently large. If the number of bidders is small, it may not pay to offer rewards to back up a credible short-list announcement in order to restrict the over-competition from the bidders.Essay 2 considers spectrum license auction in the format of the standard simultaneous multi-round English clock auction (SMRA). We find that the SMRA gives rise to severe exposure problem and the entrant bids cautiously when both incumbents still stay in the auction. We then consider three remedies to solve the entrants' exposure problem in the English clock auction: a (constrained) Vickery auction, an English clock auction with exit option and an English clock auction with both exit and call option. We find that the best remedy is the auction format SMRA with both exit and call options.Essay 3 investigates the impact of the post-auction trade on the output of license auction and downstream market structure. We consider the competitive externalities in downstream market, of which the value of winning the license depends on who else wins it. We use a simple model which has three potential bidders, two symmetric incumbents and one entrant. We find that the option of re-trade distorts the efficiency of the benchmark English clock auction in some cases and it generates no revenue to the regulator.