Paul Klemperer

Paul David Klemperer FBA (born 15 August 1956) is an economist and the Edgeworth Professor of Economics at the Department of Economics, Oxford University. He is a member of the Klemperer family. He works on industrial economics, competition policy, auction theory, and climate change economics and policy.

Having lived his early life in the Midlands where he attended the independent King Edward's School, Birmingham, Klemperer went on to gain 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 of Economics in succession to Nobel Prize winner James Mirrlees.

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. He is also a fellow of the European Economic Association.

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.

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

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.

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.

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). 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, and (with Aytek Erdil) Reference-Rule Pricing for package auctions.

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. 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. 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." 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; he is on the Environmental Economics Academic Panel to the UK's Department of the Environment (Defra).

Personal life

Klemperer is married to economist Margaret A. Meyer, with whom he has written a number of research articles.

Selected publications

Books

• Auctions: Theory and Practice, Princeton University Press, Princeton, US, 2004.
• The Economic Theory of Auctions (ed.), Edward Elgar (pub.), Cheltenham, UK, 2000.

Selected articles

• Bulow, Jeremy I.; Geanakoplos, John D.; Klemperer, Paul D. (1985). "Multimarket Oligopoly: Strategic Substitutes and Complements". Journal of Political Economy. 93 (488): 511. CiteSeerX 10.1.1.541.2368. doi:10.1086/261312. S2CID 154872708.
• Cramton, Peter; Gibbons, Robert; Klemperer, Paul (1987). "Dissolving a Partnership Efficiently". Econometrica. 55 (615): 615–632. CiteSeerX 10.1.1.456.4564. doi:10.2307/1913602. JSTOR 1913602.
• Klemperer, Paul (1987). "Markets with Consumer Switching Costs". Quarterly Journal of Economics. 102 (2): 375–94. doi:10.2307/1885068. JSTOR 1885068.
• Klemperer, Paul D.; Meyer, Margaret A. (1989). "Supply Function Equilibria in Oligopoly under Uncertainty". Econometrica. 57 (6): 1243–77. doi:10.2307/1913707. JSTOR 1913707.
• "Exchange Rate Pass Through when Market Share Matters". American Economic Review. 79: 637–54. 1989.
• Klemperer, Paul (1990). "How Broad should the Scope of Patent Protection Be?". RAND Journal of Economics. 21 (1): 113–30. JSTOR 2555498. (reprinted in The Economics of Intellectual Property, R. Towse and R. Holzhauer (eds.) 2002).
• Klemperer, P. (1995). "Competition when Consumers have Switching Costs". Review of Economic Studies. 62 (4): 515–39. doi:10.2307/2298075. JSTOR 2298075. S2CID 13044767.
• "Auctions vs. Negotiations". American Economic Review. 86: 180–94. 1996.
• Klemperer, Paul (1998). "Auctions with Almost Common Values" (PDF). European Economic Review. 42 (3–5): 757–69. doi:10.1016/s0014-2921(97)00123-2.
• Bulow, Jeremy; Klemperer, Paul (2002). "Prices and the Winner's Curse". RAND Journal of Economics. 33 (1): 1–21. CiteSeerX 10.1.1.623.4648. JSTOR 2696372.
• Erdil, Aytek; Klemperer, Paul (2010). "A New Payment Rule for Core-Selecting Package Auctions". Journal of the European Economic Association. 8 (2–3): 537–547. CiteSeerX 10.1.1.151.313. doi:10.1111/j.1542-4774.2010.tb00524.x. S2CID 1469564.
• Klemperer, Paul (2010). "The Product-Mix Auction: a New Auction Design for Differentiated Goods". Journal of the European Economic Association. 8 (2–3): 526–536. doi:10.1111/j.1542-4774.2010.tb00523.x.

References

• Beattie, Alan (8 November 2000). "Best bids guaranteed, Observing microeconomic theory can avoid collusion at government auctions" (PDF). Financial Times – via paulklemperer.org.
• Engelmann, Dirk (2005). "Book review" (PDF). Journal of Economic Psychology. 26: 155–157. doi:10.1016/j.joep.2004.10.002. Archived from the original (PDF) on 18 February 2006.
• Giles, Chris (11 March 2008). "Bank of England to clarify lending policy". Financial Times.
• Hahn, Robert; Passell, Peter (6 August 2010). "Auction Magic". Regulation2point0.
• Harford, Tim. "Dear Economist" (PDF). Financial Times. pp. Page 12, 15 May 2004 and Page 12, 24/25 September 2005. Archived from the original (PDF) on 15 July 2011.
• Harford, Tim. "The herd instinct" (PDF). Financial Times. No. 3/4 June 2006.
• Islam, Faisal (23 April 2000). "Sold to the slyest bidder". Guardian Unlimited.
• Nasar, Sylvia (29 November 1998). "The Ifs and Buts of the Tobacco Settlement" (PDF). The New York Times.
• Sabbagh, Karl (16 June 2000). "Any advance on £22.5 billion?". The Times Higher Education Supplement.
• Varian, Hal R. (1 August 2002). "Economic Scene; Tales of manipulation and design flaws from the crypt of auction history". The New York Times.
• "Book Review: Auctions: Theory and Practice" (PDF). Financial Times. 10 June 2004. Archived from the original (PDF) on 18 February 2006.
• When Lawyers inhale, The Economist, 22 May 1999
• Mergers; Byers and sellers, The Economist, 20 March 1999

External links

• Personal website
• Interview with Paul Klemperer in Financial Engineering News, September/October 2004
• Assorted News articles concerning Paul Klemperer
• How geometry came to the rescue during the banking crisis – video clip, online at | News | Science | Mathematics | segment of the UK's Guardian newspaper website