Template-type: ReDIF-Paper 1.0
Author-Name: Paul Klemperer
Author-Email: paul.klemperer@economics.ox.ac.uk
Author-Workplace-Name: Nuffield College, University of Oxford, Oxford 
Title: A New Auction for Substitutes: Central-Bank Liquidity Auctions, “Toxic Asset” Auctions, and Variable Product-Mix Auctions
Abstract: I describe a new static (sealed-bid) auction for multiple substitute goods. As in a
two-sided simultaneous multiple round auction (SMRA), bidders bid on multiple assets
simultaneously, and bid-takers choose supply functions across assets. The auction yields
more efficiency, revenue, information, and trade than running multiple separate auctions,
but is often simpler to use and understand, and less vulnerable to collusion, than a
SMRA. I designed it after the 2007 Northern Rock bank run to help the Bank of England
fight the credit crunch; in 2008 the U.S. Treasury planned (but later cancelled) using a
related design to buy “toxic assets”.
Keywords: multi-object auction, TARP, central banking, simultaneous ascending auction, treasury auction, term auction, toxic assets.
Classification-JEL: D44, E58
Length: 15 pages
Creation-Date: 2009-07-01
Number: 2009-W06
File-URL: http://www.nuffield.ox.ac.uk/economics/papers/2009/w6/BoeTarp28_7_09.pdf
File-Format: application/pdf
Handle: RePEc:nuf:econwp:0906