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Allocating multiple units by sealed-bid auctions

Author

Listed:
  • Kala Krishna

    (Pennsylvania State University)

  • Torben Tranæs

    (Institute of Economics, University of Copenhagen)

Abstract

This paper studies the allocation and rent distribution between buyers and the seller in multiple units sealed-bid auctions. We restrict attention to the complete information case. A simple diagrammatic exposition of equilibria in the first-price and uniform-price auctions is provided and their equilibria are compared one to another and to the second-price (or Vickrey) auction. We show that the truthful equilibrium in the first-price auction is revenue equivalent to the second-price auction. Both these auctions are discriminatory auctions. We also show that the revenue raised in the truthful equilibrium of the first-price auction is less than that raised in the truthful equilibirum of the uniform-price auction. The approach is also related to a number of themes found more broadly in economics such as the convergence to competition.

Suggested Citation

  • Kala Krishna & Torben Tranæs, 1998. "Allocating multiple units by sealed-bid auctions," CIE Discussion Papers 1998-05, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
    • Handle: RePEc:kud:kuieci:1998-05
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    Cited by:

    1. Kala Krishna & Torben Tranaes, 1999. "Efficient Competition With Small Numbers -- With Applications to Privatisation and Mergers," NBER Working Papers 6952, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    multiple-unit auctions; first-price sealed-bid auctions; revenue equivalence; discriminatory vs. uniform auctions;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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