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Information concentration in common value environments

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  • Vlad Mares
  • Mikhael Shor

Abstract

We consider how information concentration affects a seller’s revenue in common value auctions. The common value is a function of $$n$$ random variables partitioned among $$m \le n$$ bidders. For each partition, the seller devises an optimal mechanism. We show that whenever the value function allows scalar sufficient statistics for each player’s signals, the mechanism design problem is well-defined. Additionally, whenever a common regularity condition is satisfied, a coarser partition always reduces revenues. In particular, any merger or collusion among bidders reduces revenue. Copyright Springer-Verlag Berlin Heidelberg 2013

Suggested Citation

  • Vlad Mares & Mikhael Shor, 2013. "Information concentration in common value environments," Review of Economic Design, Springer;Society for Economic Design, vol. 17(3), pages 183-203, September.
    • Handle: RePEc:spr:reecde:v:17:y:2013:i:3:p:183-203
    DOI: 10.1007/s10058-013-0143-0
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    Cited by:

    1. Mares Vlad & Shor Mikhael, 2012. "On the Competitive Effects of Bidding Syndicates," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 12(1), pages 1-33, September.

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    More about this item

    Keywords

    Information concentration; Industry concentration; Mechanism design; Common value auctions; D44; L41; C72; D82;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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