Combinatorial Auctions for Resource Allocation

Abstract

The application of combinatorial auctions (CA) for procurement and resource allocation processes has been intensively discussed in the last ten years. Motivated by the economic success of online auctions (see section 2.1.2) and accompanied by the development of sophisticated mechanisms for the auctioning of radio frequencies to telecommunication companies in Great Britain and the United States (McMillan 1995), CAs came into the focus of electronic market engineering for other economic sectors. CAs promise to achieve higher effciency and fairness, as well as a reduction in transaction costs in industrial procurement and allocation processes (Cramton et al. 2005, Bichler et al. 2002). This thesis primarily discusses the application of CAs for dynamic pricing and automated resource allocation in ISIP processes. However, it is important to consider the broad spectrum of advantages, problems and implications that arise in connection with CA applications in a wider context. For this reason, this chapter will discuss CAs in a more general framework, whereas the following chapter regards their application more particularly in the ISIP process domain.