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(In)efficiency of auctions with the asymmetry of rights

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  • Pawel Kusmierczyk

Abstract

The private entrepreneurs are not forced to limit themselves to the standard auction rules, and in case of the procurement auctions one can observe many hybrid or quasi-auction rules spontaneously introduced. The paper analyzes two of them, that are based on the common assumption: the second-best bidder is given an additional right to improve her initial bid, and therefore win the auction. The focus of the paper is on the analysis of price and allocative efficiency of such modifications, to determine whether they can serve as an alternative to the standard auction rules. Theoretical analyses, followed by the laboratory experiments, provide no proof for that conclusion though, as none of the rules under study beats the classical first-price sealed-bid auction.

Suggested Citation

  • Pawel Kusmierczyk, 2015. "(In)efficiency of auctions with the asymmetry of rights," Business and Economic Horizons (BEH), Prague Development Center, vol. 10(4), pages 223-237, January.
    • Handle: RePEc:pdc:jrnbeh:v:10:y:2015:i:4:p:223-237
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    More about this item

    Keywords

    Auction; procurement auction; efficiency; experiments;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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