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Book Synopsis
Traditional economic theory
studies idealized markets in
which prices alone can guide
efficient allocation, with no
need for central organization.
Such models build from
Adam Smith’s famous
concept of an invisible hand,
which guides markets and
renders regulation or
interference largely
unnecessary. Yet for many
markets, prices alone are not
enough to guide feasible and
efficient outcomes, and
regulation alone is not
enough, either. Consider air
traffic control at major
airports. While prices could
encourage airlines to take off
and land at less congested
times, prices alone do just
part of the job; an air traffic
control system is still
indispensable to avoid
disastrous consequences.
With just an air traffic
controller, however, limited
resources can be wasted or
poorly used. What’s needed
in this and many other realworld cases is an auction
system that can effectively
reveal prices while still
maintaining enough direct
control to ensure that
complex constraints are
satisfied.In Discovering
Prices, Paul Milgrom?the
world’s most frequently cited
academic expert on auction
design?describes how
auctions can be used to
discover prices and guide
efficient resource allocations,
even when resources are
diverse, constraints are
critical, and market-clearing
prices may not even exist.
Economists have long
understood that externalities
and market power both
Book details
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Author : Paul Milgrom
Pages : 248 pages
Publisher : Columbia
University Press 201705-23
Language : English
ISBN-10 : 0231175981
ISBN-13 :
9780231175982
necessitate market
organization. In this book,
Milgrom introduces complex
constraints as another reason
for market design. Both
lively and technical, Milgrom
roots his new theories in realworld examples (including
the ambitious U.S. incentive
auction of radio frequencies,
whose design he led) and
provides economists with
crucial new tools for dealing
with the world’s growing
complex resource allocation
problems.