| Popis: |
We study the design of an auction for an income-generating asset such as an intellectual property license. Each bidder has a signal about his future income from acquiring the asset. After the asset is allocated, the winner's income is realized privately. The principal can audit the winner, at a cost, and then charge a payment contingent on the winner's realized income. We solve for a dynamic mechanism that maximizes revenue, net auditing costs. The winning bidder is charged linear royalties up to a cap. A higher bidder pays more in cash and faces a lower royalty cap. |
