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Multi-Unit Auctions and Competition Stricture

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  • Raphaële Préget
  • Sophie Thoyer

Abstract

Is it better for a seller who wants to auction multiple units to face many small bidders or few large bidders? Since multi-unit auction models usually have many equilibria, there are no theoretical predictions on the impact of the competition structure on the performance of a multi-unit auction (in terms of expected revenue and allocation efficiency). Our experimental results with uniform-price auctions support that with a constant competition degree (identical aggregate demand and supply), when the number of bidders increases while individual demand decreases, there is less strategic bidding (demand reduction). It leads to higher expected revenue with a lower variance but allocation efficiency is not significantly different.

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File URL: http://www.lameta.univ-montp1.fr/Documents/DR2009-18.pdf
File Function: First version, 2009
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Bibliographic Info

Paper provided by LAMETA, Universtiy of Montpellier in its series Working Papers with number 09-18.

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Length: 27 pages
Date of creation: Dec 2009
Date of revision: Dec 2009
Handle: RePEc:lam:wpaper:09-18

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  1. Richard Engelbrecht-Wiggans & John List & David Reiley, 2004. "Demand reduction in a multi-unit auctions with varying numbers of bidders: Theory and evidence from a field experiment," Framed Field Experiments 00147, The Field Experiments Website.
  2. Sophie Thoyer & Atakelty Hailu, 2005. "Multi-Unit Auctions to Allocate Water Scarcity Simulating bidding behaviour with agent based models," Working Papers 05-01, LAMETA, Universtiy of Montpellier, revised Jan 2005.
  3. 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.
  4. Chan, Chris & Laplagne, Patrick & Appels, David, 2003. "The Role of Auctions in Allocating Public Resources," Staff Research Papers 31916, Productivity Commission.
  5. John List & David Reiley, 2008. "Field experiments," Artefactual Field Experiments 00091, The Field Experiments Website.
  6. 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.
  7. Chakraborty, Indranil, 2006. "Bundle and separate sales in auctions with entry," Games and Economic Behavior, Elsevier, vol. 54(1), pages 31-46, January.
  8. Wilson, Robert, 1979. "Auctions of Shares," The Quarterly Journal of Economics, MIT Press, vol. 93(4), pages 675-89, November.
  9. Richard Engelbrecht-Wiggans & Charles M. Kahn, 1998. "Multi-unit auctions with uniform prices," Economic Theory, Springer, vol. 12(2), pages 227-258.
  10. David Porter & Roumen Vragov, 2006. "An experimental examination of demand reduction in multi-unit versions of the Uniform-price, Vickrey, and English auctions," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 27(6), pages 445-458.
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