I study an allocation mechanism of a single item in the presence of type-dependent externalities between bidders. The type-dependency introduces countervailing incentives and the allocation sometimes requires that types in an interior subset obtain their reservation utility. Furthermore,...

I analyze optimal auction design in the presence of linear type-dependent negative externalities. I characterize the properties of the optimal mechanism when externalities are “strongly decreasing” and “increasing” in the agent’s valuation and I discuss its implementation with...

A seller decides whether to allocate an item among two potential buyers. The seller and buyer 1 interact ex post in such a way that each of them suffers a negative externality if the other possesses the item. We show that the optimal allocation rule favors buyer 2, who does not interact ex post...