On Strategic Quantity Bidding in Multiple Unit Auctions
Standard studies of multiple unit auctions generally overlook the strategic role of bidders' quantity decisions. Using a simple equilibrium model of bidding, the author analyzes bidders' incentives to choose quantities in discriminatory and competitive auctions. The main result is that bidders have a stronger strategic incentive to bid for fewer units in competitive auctions. Since under competition a bidder pays the lowest accepted price for each unit she gets, she may benefit from dropping her quantity to let lower-valuing bidders enter the set of winners. This prediction is consistent with empirical observations from foreign currency and spectrum auctions. Copyright 1997 by Blackwell Publishing Ltd
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Volume (Year): 45 (1997)
Issue (Month): 2 (June)
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