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Revenue and efficiency in multi-unit uniform-price auctions

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  • Bresky, Michal

Abstract

This paper analyzes efficiency in a uniform-price multi-unit auction with a positive reservation price. I demonstrate that the reservation price is an important policy tool that may increase efficiency (or welfare) in multi-unit uniform-price auctions. I show that the higher the reservation price is, the higher is the sellerʼs revenue and the higher is the efficiency of a final allocation of units that could be attained in a multi-unit uniform-price auction. The reservation price increases the bidderʼs equilibrium strategy in a specific way that is inherent to the uniform-price auction. Thus the reservation price effect on efficiency is in contrast to other auction formats; e.g., the reservation price decreases efficiency in the Vickrey auction and single-unit auctions with symmetric bidders. Therefore the main result can be added to the list of results from mechanism design and auction theory that fail to extend the single-unit/single-dimensional context to the multi-unit/multi-dimensional one.

Suggested Citation

  • Bresky, Michal, 2013. "Revenue and efficiency in multi-unit uniform-price auctions," Games and Economic Behavior, Elsevier, vol. 82(C), pages 205-217.
  • Handle: RePEc:eee:gamebe:v:82:y:2013:i:c:p:205-217
    DOI: 10.1016/j.geb.2013.05.007
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    Cited by:

    1. repec:wsi:apjorx:v:34:y:2017:i:06:n:s0217595917500282 is not listed on IDEAS
    2. Raphael Calel, 2010. "Auctioning conservation contracts in thepresence of externalities," GRI Working Papers 22, Grantham Research Institute on Climate Change and the Environment.
    3. Chen, Ning & Ghosh, Arpita & Lambert, Nicolas S., 2014. "Auctions for social lending: A theoretical analysis," Games and Economic Behavior, Elsevier, vol. 86(C), pages 367-391.

    More about this item

    Keywords

    Multi-unit auction; Multiple-object auction; Market efficiency; Optimal selling mechanism; Discriminatory and uniform-price auction with reservation price;

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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