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BUDGET CONSTRAINTS AND DEMAND REDUCTION IN SIMULTANEOUS ASCENDING-BID AUCTIONS -super-*

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  • SANDRO BRUSCO
  • GIUSEPPE LOPOMO

Abstract

The possibility, even if arbitrarily small, of binding budget constraints in simultaneous ascending bid auctions induces strategic demand reduction and generates significant inefficiencies. Under mild conditions on the distributions of the bidders' values, unconstrained bidders behave as if they were liquidity constrained, even as the probability that bidders are budget constrained goes to zero. Copyright 2008 The Authors.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1467-6451.2008.00335.x
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Bibliographic Info

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

Volume (Year): 56 (2008)
Issue (Month): 1 (03)
Pages: 113-142

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Handle: RePEc:bla:jindec:v:56:y:2008:i:1:p:113-142

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821

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Cited by:
  1. Gerard van der Laan & Zaifu Yang, 2011. "An Ascending Multi-Item Auction with Financially Constrained Bidders," Discussion Papers 11/04, Department of Economics, University of York.
  2. Aner Sela & Reut Megidish, 2012. "Sequential Contests With Synergy And Budget Constraints," Working Papers 1212, Ben-Gurion University of the Negev, Department of Economics.
  3. Kai Konrad, 2012. "Information alliances in contests with budget limits," Public Choice, Springer, vol. 151(3), pages 679-693, June.
  4. Megidish, Reut & Sela, Aner, 2011. "Sequential Contests with Synergy and Budget Constraints," CEPR Discussion Papers 8383, C.E.P.R. Discussion Papers.
  5. Sandro Brusco & Giuseppe Lopomo & Leslie M. Marx, 2011. "The Economics of Contingent Re-auctions," American Economic Journal: Microeconomics, American Economic Association, vol. 3(2), pages 165-93, May.
  6. Alexey Malakhov & Rakesh Vohra, 2008. "Optimal auctions for asymmetrically budget constrained bidders," Review of Economic Design, Springer, vol. 12(4), pages 245-257, December.
  7. Talman, A.J.J. & Yang, Z.F., 2011. "An Efficient Multi-Item Dynamic Auction with Budget Constrained Bidders," Discussion Paper 2011-096, Tilburg University, Center for Economic Research.
  8. Dolf Talman & Zaifu Yang, 2013. "An Efficient Multi-Item Dynamic Auction with Budget Constrained Bidders," Discussion Papers 13/31, Department of Economics, University of York.

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