Profit Maximizing in Auctions of Public Goods
AbstractA profit-maximizing auctioneer can provide a public good to a group of agents. Each group member has a private value for the good being provided to the group. We investigate an auction mechanism where the auctioneer provides the good to the group, only if the sum of their bids exceeds a reserve price declared previously by the auctioneer. For the two-bidder case with private values drawn from a uniform distribution we characterize the continuously differentiable symmetric equilibrium bidding functions for the agents, and find the optimal reserve price for the auctioneer when such functions are used by the bidders. We also examine another interesting family of equilibrium bidding functions for this case, with a discrete number of possible bids, and show the relation (in the limit) to the differentiable bidding functions.
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Bibliographic InfoPaper provided by EconWPA in its series Game Theory and Information with number 9707010.
Length: 32 pages
Date of creation: 22 Jul 1997
Date of revision: 01 Apr 1998
Note: Type of Document - LaTeX; prepared on IBM PC; to print on PostScript; pages: 32 ; figures: 3 eps files included. Comments welcome
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public goods; auctions; externalities;
Other versions of this item:
- C00 - Mathematical and Quantitative Methods - - General - - - General
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
This paper has been announced in the following NEP Reports:
- NEP-ALL-1998-10-02 (All new papers)
- NEP-GTH-1998-10-02 (Game Theory)
- NEP-MIC-1998-10-02 (Microeconomics)
- NEP-PBE-1998-10-02 (Public Economics)
- NEP-PUB-1998-10-02 (Public Finance)
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