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Multi-Unit Auctions with Synergy

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Author Info
Indranil Chakraborty () (University of Oklahoma)

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Abstract

In this note we examine four standard multi-unit sealed-bid auctions in the presence of synergy. The structure of the equilibrium bidding strategy under each rule is quite intuitive. Whether the equilibrium involves "bundle-bidding" or "separating-bidding" strategy depends on the presence of the "exposure problem" and the pressure of "demand reduction" in each case. When the bidders can implicitly coordinate to avoid the "exposure problem" and the pressure of "demand reduction," the equilibrium strategy can be calculated using parallels with unit-demand auctions. However, in the presence of the "exposure problem" well-behaved symmetric equilibria that can be characterized by the first-order condition of bidders' maximization problem may not exist in at least some situations.

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Publisher Info
Article provided by Economics Bulletin in its journal Economics Bulletin.

Volume (Year): 4 (2004)
Issue (Month): 8 ()
Pages: 1-14
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:ebl:ecbull:v:4:y:2004:i:8:p:1-14

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Related research
Keywords: Multi-Unit Auction; Synergy.;

Find related papers by JEL classification:
D4 - Microeconomics - - Market Structure and Pricing

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Vijay Krishna & Robert Rosenthal, 1995. "Simultaneous Auctions with Synergies," Game Theory and Information 9503004, EconWPA. [Downloadable!]
    Other versions:
  2. Flavio Menezes & Paulo Monteiro, 2003. "Synergies and price trends in sequential auctions," Review of Economic Design, Springer, vol. 8(1), pages 85-98, August. [Downloadable!] (restricted)
    Other versions:
  3. Tenorio, Rafael, 1997. "On Strategic Quantity Bidding in Multiple Unit Auctions," Journal of Industrial Economics, Blackwell Publishing, vol. 45(2), pages 207-17, June. [Downloadable!] (restricted)
  4. Engelbrecht-Wiggans, Richard & Kahn, Charles M., 1998. "Multi-Unit Pay-Your-Bid Auctions with Variable Awards," Games and Economic Behavior, Elsevier, vol. 23(1), pages 25-42, April. [Downloadable!] (restricted)
  5. Kagel, John H. & Levin, Dan, 2005. "Multi-unit demand auctions with synergies: behavior in sealed-bid versus ascending-bid uniform-price auctions," Games and Economic Behavior, Elsevier, vol. 53(2), pages 170-207, November. [Downloadable!] (restricted)
  6. McMillan, John, 1994. "Selling Spectrum Rights," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 145-62, Summer. [Downloadable!] (restricted)
  7. Noussair, Charles, 1995. "Equilibria in a Multi-object Uniform Price Sealed Bid Auction with Multi-unit Demands," Economic Theory, Springer, vol. 5(2), pages 337-51, March.
  8. Lawrence M. Ausubel & Peter Cramton, 1995. "Demand Reduction and Inefficiency in Multi-Unit Auctions," Papers of Peter Cramton 98wpdr, University of Maryland, Department of Economics - Peter Cramton, revised 22 Jul 2002. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Sandro Brusco & Giuseppe Lopomo, 2009. "Simultaneous ascending auctions with complementarities and known budget constraints," Economic Theory, Springer, vol. 38(1), pages 105-124, January. [Downloadable!] (restricted)
  2. Indranil Chakraborty, 2006. "Characterization of equilibrium in pay-as-bid auctions for multiple units," Economic Theory, Springer, vol. 29(1), pages 197-211, September. [Downloadable!] (restricted)
  3. Chow, YuenLeng & Yavas, Abdullah, 2008. "Auctions with Positive Synergies: Experimental Evidence," MPRA Paper 12669, University Library of Munich, Germany. [Downloadable!]
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