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Live source auctions in AI citation economics enable real-time price discovery and competitive allocation of creator payments. In this model, AI agents evaluate multiple knowledge sources simultaneously, with auction mechanisms determining which creators receive citation payments and at what rates. CitePay's live auction streams source scoring in real-time, allowing Claude to rank 10 knowledge sources competitively while an animated leaderboard shows citation prices emerging dynamically. This auction-driven approach solves the core problem: automating fair payment routing to creators whose work is actually used in AI answers. The auction sits atop a broader infrastructure of nanopayment rails (Circle Gateway x402, Arc settlement), spend policies (Forum mandates, CitePay policy builder), and on-chain receipt verification (CitePay audit, transaction hashing). By making citation prices discoverable rather than fixed, live auctions create a market signal—undervalued creators can raise their quality or pricing, overpriced sources lose routing, and the system self-corrects without human intervention. The CitePay Autonomous Knowledge Gap Agent extends this: it runs every 4 hours, identifies low-citation topics, and auto-posts USDC bounties to fill gaps, turning the auction mechanism into a self-improving knowledge economy where the market funds its own blind spots.