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On Strategic Quantity Bidding in Multiple Unit Auctions

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  • Tenorio, Rafael
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    Abstract

    Standard studies of multiple unit auctions generally overlook the strategic role of bidders' quantity decisions. Using a simple equilibrium model of bidding, the author analyzes bidders' incentives to choose quantities in discriminatory and competitive auctions. The main result is that bidders have a stronger strategic incentive to bid for fewer units in competitive auctions. Since under competition a bidder pays the lowest accepted price for each unit she gets, she may benefit from dropping her quantity to let lower-valuing bidders enter the set of winners. This prediction is consistent with empirical observations from foreign currency and spectrum auctions. Copyright 1997 by Blackwell Publishing Ltd

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    Bibliographic Info

    Article provided by Wiley Blackwell in its journal Journal of Industrial Economics.

    Volume (Year): 45 (1997)
    Issue (Month): 2 (June)
    Pages: 207-17

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    Handle: RePEc:bla:jindec:v:45:y:1997:i:2:p:207-17

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    Cited by:
    1. Catherine D. Wolfram, 1997. "Strategic Bidding in a Multi-Unit Auction: An Empirical Analysis of Bids to Supply Electricity," NBER Working Papers 6269, National Bureau of Economic Research, Inc.
    2. Yvan Lengwiler, 1998. "The multiple unit auction with variable supply," Finance and Economics Discussion Series 1998-28, Board of Governors of the Federal Reserve System (U.S.).
    3. Ping Zhang, 2009. "Characterization of Pure Strategy Equilibria in Uniform Price IPO Auctions," Discussion Papers 2009-05, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    4. John List & David Lucking-Reiley, 2002. "Bidding behavior and decision costs in field experiments," Framed Field Experiments 00181, The Field Experiments Website.
    5. Robert F. Easley & Rafael Tenorio, 1999. "Bidding Strategies in Internet Yankee Auctions," Microeconomics 9907001, EconWPA.
    6. repec:ebl:ecbull:v:4:y:2004:i:8:p:1-14 is not listed on IDEAS
    7. Rosen, Christiane & Madlener, Reinhard, 2013. "An Experimental Analysis of Single vs. Multiple Bids in Auctions of Divisible Goods," FCN Working Papers 8/2013, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN), revised Nov 2013.
    8. Indranil Chakraborty, 2004. "Multi-Unit Auctions with Synergy," Economics Bulletin, AccessEcon, vol. 4(8), pages 1-14.
    9. Rafael Tenorio & Robert F. Easley, 1999. "Bidding Strategies in Internet Yankee Auctions: Theory and Evidence," Computing in Economics and Finance 1999 1021, Society for Computational Economics.

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