Auctions with Almost Homogeneous Bidders
We deviate from the symmetric case of the independent private value model by allowing the bidders’ value distributions, which depend on parameters, to be slightly different. We show that previous results about the equality to the first-order in the parameters between revenues from the second-price auction and other auction mechanisms follow from the joint differentiability of the equilibria with respect to the parameters. We prove this differentiability for the first-price auction and obtain general formulas for the different first-order effects. From our results about the first-price auction, we analytically generate examples with continuous distributions where a stochastic improvement to a bidder’s value distribution reduces his equilibrium payoff. In another application, we show that, starting from competition among cartels of equal sizes, allowing in a small number of members from other cartels can be profitable only if the members or the synergies between them are strong enough.
|Date of creation:||2006|
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- Leandro Arozamena & Estelle Cantillon, 2004.
"Investment incentives in procurement auctions,"
ULB Institutional Repository
2013/9005, ULB -- Universite Libre de Bruxelles.
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- Arozamena, Leandro & Cantillon, Estelle, 2001. "Investment Incentives in Procurement Auctions," CEPR Discussion Papers 2676, C.E.P.R. Discussion Papers.
- Leandro Arozamena & Estelle Cantillon, 2000. "Investment Incentives in Procurement Auctions," Cowles Foundation Discussion Papers 1276, Cowles Foundation for Research in Economics, Yale University.
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- Bernard Lebrun, 2004. "Uniqueness of the Equilibrium in First-Price Auctions," Discussion Papers 1, York University, Department of Economics, revised May 2004.
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