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Pro‐competitive Rationing in Multi‐unit Auctions

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  • Pär Holmberg

Abstract

In multi‐unit auctions, it is necessary to specify rationing rules to break ties between multiple marginal bids. The standard approach is to ration marginal bids proportionally. This article shows how bidding can be made more competitive – and the auctioneer can increase his surplus – if the rationing rule instead gives increasing priority to bidders with a small volume of marginal bids at clearing prices closer to the reservation price. As compared to standard rationing, such a rule can, in beneficial circumstances, have almost the same effect on the competitiveness of bids as a doubling of the number of bidders.

Suggested Citation

  • Pär Holmberg, 2017. "Pro‐competitive Rationing in Multi‐unit Auctions," Economic Journal, Royal Economic Society, vol. 127(605), pages 372-395, October.
  • Handle: RePEc:wly:econjl:v:127:y:2017:i:605:p:f372-f395
    DOI: 10.1111/ecoj.12402
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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing

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