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Paul Klemperer

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Paul David Klemperer FBA (born 15 August 1956)[1] is an economist and the Edgeworth Professor of Economics at Oxford University. He is a member of the Klemperer family.

Klemperer has an engineering degree from Cambridge University, and an MBA and an economics PhD from Stanford University. He was elected John Thomson Fellow and Tutor of St Catherine's College, Oxford in 1984, and a Professorial Fellow of Nuffield College, Oxford in 1995, when he became Edgeworth Professor in succession to Nobel prizewinner James Mirrlees.

He works on industrial economics, competition policy, auction theory, and climate change economics and policy.

He was a Member of the UK Competition Commission from 2001–5. He was elected a Fellow of the Econometric Society in 1994, a Fellow of the British Academy in 1999, and a Foreign Honorary Member of the American Academy of Arts and Sciences in 2005.

Academic contributions

His 1985 papers (with Jeremy Bulow and John Geanakoplos) developed the concept – and invented the terminology – of "strategic complements" that is now commonly used in game theory, industrial organisation and elsewhere.[2]

His PhD thesis, and independent work by Carl Christian von Weizsacker, began the study of consumer switching costs.[3]

His paper on supply function equilibria (with Margaret Meyer) developed a standard model for the analysis of privatised electricity markets, and has been important in developing the theory of multiunit auctions.[4]

His papers (many of which are co-authored with Jeremy Bulow) apply ideas from auction theory to other economic contexts, including finance and political economy.[5][6][7]

He has also invented new auction designs, including the "Product Mix Auction" that is now in regular use by the Bank of England (currently used monthly).[8] This new auction for differentiated products has similarities to a simultaneous multiple-round auction, but runs instantaneously, is said to be more robust against collusion, and allows sellers, as well as buyers, to specify how the quantities they trade will depend on the auction prices. His other innovations include the Anglo-Dutch auction,[9] and (with Aytek Erdil) Reference-Rule Pricing for package auctions.[10]

He has also worked (with Elizabeth Baldwin) on applying tropical geometry to economics and auctions, including the Product Mix auction.

Public policy

He was principal auction-theorist designing the UK '3G' mobile-phone license auction that raised £22½ billion in spring 2000 and was far more successful than several parallel exercises on the European continent. The Netherland auction that took place 3 months later raised 1/4 of the revenue per head of population, and the difference has been attributed to the auction design.[11] It has been argued that the UK Treasury owes £15 billion or more to him and Ken Binmore, who led the auction team.

In 2002, he advised the UK government on the world's first auction for greenhouse gas emissions reductions, working with Nobel prizewinner Eric Maskin.

In 2007–2008, he advised the UK and US governments on the financial crisis, and he developed a new form of auction (the Product Mix auction) to help the Bank of England alleviate the liquidity crisis.[12] The Bank Governor, Sir Mervyn King, told the Economist that "The Bank of England's use of Klemperer auctions in our liquidity insurance operations is a marvellous application of theoretical economics to a practical problem of vital importance to financial markets."[13] He subsequently advised other countries' Central Banks.

He advised the US Federal Trade Commission 1999–2001, was a Member of the UK Competition Commission from 2001–5, and remains on its Panel of Economic Advisors.

He participated in the meeting that drafted the Potsdam Memorandum to the 2007 UN Climate Change Conference in Bali;[14] he is on the Environmental Economics Academic Panel to the UK's Department of the Environment (Defra).

Selected publications

Books

Selected articles

  • "Multimarket Oligopoly: Strategic Substitutes and Complements”, Journal of Political Economy 1985, 93, 488 511 (with Bulow and Geanakoplos).
  • “Dissolving a Partnership Efficiently”, Econometrica 1987, 55, 615 32 (with Cramton and Gibbons).
  • “Markets with Consumer Switching Costs”, Quarterly Journal of Economics 1987, 102, 375 94 (reprinted in The Economics of Business Strategy, J. Kay (ed.) 2003).
  • “Supply Function Equilibria in Oligopoly under Uncertainty”, Econometrica 1989, 57, 1243–77 (with Meyer).
  • “Exchange Rate Pass Through when Market Share Matters”, American Economic Review 1989, 79, 637–54 (with Froot).
  • “How Broad should the Scope of Patent Protection Be?”, Rand Journal of Economics 1990, 21, 113–30 (reprinted in The Economics of Intellectual Property, R. Towse and R. Holzhauer (eds.) 2002).
  • “Competition when Consumers have Switching Costs”, Review of Economic Studies 1995, 62, 515–39.
  • “Auctions vs. Negotiations”, American Economic Review 1996, 86, 180–94 (with Bulow).
  • “Auctions with Almost Common Values”, European Economic Review 1998, 42, 757–69.
  • “Prices and the Winner's Curse”, Rand Journal of Economics 2002, 33, 1–21 (with Bulow).
  • “A New Payment Rule for Core-Selecting Package Auctions”, Journal of the European Economic Association, 2010 (with Erdil).
  • “The Product-Mix Auction: a New Auction Design for Differentiated Goods”, Journal of the European Economic Association, 2010.

References

Notes

  1. ^ KLEMPERER, Prof. Paul David’, Who's Who 2014, A & C Black, 2014; online edn, Oxford University Press, 2014
  2. ^ Multimarket Oligopoly, JPE
  3. ^ Switching Costs, QJE
  4. ^ Supply Functions, Econometrica
  5. ^ Rational Frenzies and Crashes, JPE
  6. ^ War of Attrition, AER
  7. ^ Auctions versus negotiations, AER
  8. ^ Product-Mix Auction, JEEA
  9. ^ Anglo-Dutch, EER
  10. ^ Payment Rule, JEEA
  11. ^ Madden, Saglam and Morey "Auction Design and the Success of National 3G Spectrum Auctions"
  12. ^ Auction Magic, Reguation2point0
  13. ^ A golden age of micro. The Economist, October 19th 2012
  14. ^ What is the top priority on climate change?, VoxEU
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