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Bangalore city is offering two adjacent plots { one for the development of industrial warehouses (W) and another for offices/commercial (C). Three...
Bangalore city is offering two adjacent plots { one for the development of industrial warehouses (W) and another for offices/commercial (C). Three developers are bidding for these two plots. Ajanta specializes in commercial office space whereas Bhoomi only develops warehouses. Finally, Eden constructs both offices and warehouses.
The table below shows the private valuations for land plots for each developer (in Rs. Crores), for warehouses (W), commercial (C) and combined (CW) property.
Ajanta (W=0, C=200, CW=200)
Bhoomi (W=200, C=0, CW=200)
Eden (W=100, C=100, CW=200)
Suppose that the city hires you as a consultant to help with this auction and you suggest that the city use a clock auction with bid increments of Rs. 10 crores to allocate the plots to developers.
What are the final bids by each developer?
Who receives each plot, and at what price?
How much revenue does the city earn?
