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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.

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  • 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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    6. Congjun Rao & Yong Zhao & Junjun Zheng & Mark Goh & Cheng Wang, 2017. "Bidding Behavior and Equilibrium Excursion of Uniform Price Auction Mechanism," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 34(06), pages 1-17, December.
    7. Edoardo Gaffeo & Ronny Mazzocchi, 2019. "“The price is right”: using auction theory to enhance competition in the NPL market," Journal of Banking Regulation, Palgrave Macmillan, vol. 20(1), pages 104-112, March.
    8. Toshihiro Tsuchihashi, 2021. "A buyout option alleviates implicit collusion in uniform‐price auctions," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(5), pages 1146-1155, July.

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    More about this item

    Keywords

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

    JEL classification:

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

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