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Tilting the Supply Schedule to Enhance Competition in Uniform- Price Auctions

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Author Info

  • Marco LiCalzi

    (University of Venice)

  • Alessandro Pavan

    (Northwestern University)

Abstract

Uniform-price auctions of a divisible good in fixed supply admit underpricing equilibria, where bidders submit high inframarginal bids to prevent competition on prices. The seller can obstruct this behavior by tilting her supply schedule and making the amount of divisible good on offer change endogenously with its (uniform) price. Precommitting to an increasing supply curve is a strategic instrument to reward aggressive bidding and enhance expected revenue. A fixed supply may not be optimal even when accounting for the cost to the seller of issuing a quantity different from her target supply.

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File URL: http://128.118.178.162/eps/game/papers/0210/0210003.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Game Theory and Information with number 0210003.

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Length: 30 pages
Date of creation: 17 Oct 2002
Date of revision:
Handle: RePEc:wpa:wuwpga:0210003

Note: Type of Document - Acrobat PDF; prepared on Mac; to print on PostScript; pages: 30 ; figures: included
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Web page: http://128.118.178.162

Related research

Keywords: uniform-price auction; divisible good; strategic role of the seller; endogenous supply; Treasury and IPO auctions.;

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