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Improving Efficiency Using Reserve Prices: An Equilibrium Analysis of Core-Selecting Auctions

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  • Ryuji Sano

    (Institute of Economic Research, Kyoto University)

Abstract

This study analyzes the equilibrium of core-selecting auctions under incomplete information. We consider the ascending proxy auction of Ausubel and Milgrom (2002) in a stylized environment with two goods and three bidders: two local and one global. Local bidders with a sufficiently high value bid almost truthfully. In contrast, local bidders with a sufficiently low value submit a zero bid because of free-riding incentive. We also provide equilibrium with reserve prices, and show that a reserve price for local bidders improve both allocative efficiency and revenue in equilibrium.

Suggested Citation

  • Ryuji Sano, 2015. "Improving Efficiency Using Reserve Prices: An Equilibrium Analysis of Core-Selecting Auctions," KIER Working Papers 926, Kyoto University, Institute of Economic Research.
    • Handle: RePEc:kyo:wpaper:926
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    core-selecting auctions; ascending proxy auction; reserve price;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design

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