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Strategic Price Discounting and Rationing in Uniform Price Auctions

  • Bourjade, Sylvain

Uniform price auctions admit a continuum of collusive seeming equilibria due to bidders' market power. In this paper, I modify the auction rules in allowing the seller to ration strategic bidders in order to ensure small bidders' participation. I show that many of these "bad" equilibria disappear when strategic bidders do not know small bidders' willingness to pay. Moreover, when the seller is unconstrained in the quantity she can allocate to small bidders, the unique equilibrium price is the highest that the seller could get.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 7260.

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Date of creation: Mar 2003
Date of revision: Oct 2007
Handle: RePEc:pra:mprapa:7260
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  16. Milgrom, Paul R & Weber, Robert J, 1982. "A Theory of Auctions and Competitive Bidding," Econometrica, Econometric Society, vol. 50(5), pages 1089-1122, September.
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