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THE EFFECT OF AUCTION FORMAT ON EFFICIENCY AND REVENUE IN DIVISIBLE GOODS AUCTIONS: A TEST USING KOREAN TREASURY AUCTIONS -super-

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  • BOO-SUNG KANG
  • STEVEN L. PULLER

Abstract

This paper measures the efficiency and revenue properties of the two most popular formats for divisible goods auctions: the uniform-price and discriminatory auction. We analyze bids into the Korean Treasury auctions which have used both formats. We find that the discriminatory auction yields statistically higher revenue. Unlike previous work that uses data from only one format, we are able to compare the efficiency properties of the two formats. We find that the discriminatory auction better allocates treasury bills to the highest value financial institutions. However, the differences in revenue and efficiency are not large because the auctions are very competitive. Copyright 2008 The Authors. Journal compilation 2008 Blackwell Publishing Ltd. and the Editorial Board of The Journal of Industrial Economics.

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  • Boo-Sung Kang & Steven L. Puller, 2008. "THE EFFECT OF AUCTION FORMAT ON EFFICIENCY AND REVENUE IN DIVISIBLE GOODS AUCTIONS: A TEST USING KOREAN TREASURY AUCTIONS -super-," Journal of Industrial Economics, Wiley Blackwell, vol. 56(2), pages 290-332, June.
  • Handle: RePEc:bla:jindec:v:56:y:2008:i:2:p:290-332
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    References listed on IDEAS

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    1. Richard Blundell & Stephen Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
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    3. Stephen Bond & Dietmar Harhoff & John Van Reenen, 2010. "Investment, R&D and Financial Constraints in Britain and Germany," NBER Chapters,in: Contributions in Memory of Zvi Griliches, pages 433-460 National Bureau of Economic Research, Inc.
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    5. Blundell, R. & Bond, S., 1995. "Initial Conditions and Moment Restrictions in Dynamic Panel Data Models," Economics Papers 104, Economics Group, Nuffield College, University of Oxford.
    6. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, pages 115-143.
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    Cited by:

    1. Elskamp, Rebecca, 2015. "Empirical Documentation of Bid Shading in the Discriminatory Auction," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205093, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    2. Monostori, Zoltán, 2013. "Diszkriminatív áras és egyenáras aukciók
      [Discriminatory and uniform-price auctions]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(10), pages 1048-1074.
    3. Zheng, Xiaoyong, 2009. "Quantifying the cost of excess market thickness in timber sale auctions," International Journal of Industrial Organization, Elsevier, pages 553-566.
    4. repec:eee:indorg:v:53:y:2017:i:c:p:215-239 is not listed on IDEAS
    5. Ali Hortaçsu & Jakub Kastl & Allen Zhang, 2017. "Bid Shading and Bidder Surplus in the U.S. Treasury Auction System," NBER Working Papers 24024, National Bureau of Economic Research, Inc.
    6. Francisco Alvarez & Cristina Mazón, 2016. "Price volatility in the secondary market and bidders’ heterogeneous behavior in Spanish Treasury auctions," Empirical Economics, Springer, pages 1435-1466.
    7. Andrés González & Martha López & Norberto Rodríguez & Santiago Téllez, 2014. "Fiscal Policy in a Small Open Economy with Oil Sector and non-Ricardian Agents," REVISTA DESARROLLO Y SOCIEDAD, UNIVERSIDAD DE LOS ANDES-CEDE, November.
    8. McAdams, David, 2008. "Partial identification and testable restrictions in multi-unit auctions," Journal of Econometrics, Elsevier, pages 74-85.
    9. Ali Hortaçsu & Fernando Luco & Steven L. Puller & Dongni Zhu, 2017. "Does Strategic Ability Affect Efficiency? Evidence from Electricity Markets," NBER Working Papers 23526, National Bureau of Economic Research, Inc.
    10. Ali Hortaçsu & David McAdams, 2010. "Mechanism Choice and Strategic Bidding in Divisible Good Auctions: An Empirical Analysis of the Turkish Treasury Auction Market," Journal of Political Economy, University of Chicago Press, vol. 118(5), pages 833-865.
    11. Andrés González & Martha López & Norberto Rodríguez & Santiago Téllez, 2014. "Fiscal Policy in a Small Open Economy with Oil Sector and non-Ricardian Agents," REVISTA DESARROLLO Y SOCIEDAD, UNIVERSIDAD DE LOS ANDES-CEDE, November.

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