On Auction for Siting Noxious Facilities in a Multiple-City Region

The siting of noxious facilities is most of the time a reason for conflict. Kunreuther et al. [1986] and O'Sullivan [1993] suggest two auctions to facilitate the siting of such facilities: the low-bid and high-bid auctions. O'Sullivan shows that, in a two-city region, the high-bid auction is far superior to the low-bid auction. This paper proposes to extend the analysis and to consider a multiple-city region. In that case we show that the previous result does not hold. So, we describe an new auction mechanism, named total-bid auction, and we show that it has theoretical properties superior to previous auctions