Keywords: Multiple unit auction, uniform price, price discrimination, elastic supply, decreasing valuation
Abstract: The theory of multiple unit auctions traditionally assumes that the
quantity is fixed. I argue that this assumption is not appropriate for
applications because the seller may be able and willing to adjust the
to the bidding. In this paper I address this shortcoming by analyzing a
multi-unit auction game between a monopolistic seller who can produce
arbitrary quantities at constant unit cost, and oligopolistic bidders.
I establish the existence of a subgame-perfect equilibrium for price
discriminating and for uniform price auctions. I also show that bidders
have an incentive to misreport their true demand in both auction
but they do that in different ways and for different reasons.
both auction formats are inefficient, but there is no unambiguous
among them. Finally, the more competitive the bidders are, the more
the seller is to prefer uniform pricing over price discrimination, yet
increased competition among bidders may or may not enhance efficiency.
Full paper (418 KB PDF)
| Full paper (240 KB Postscript)
Home | Economic research and data | FR working papers | FEDS | 1998 FEDS papers
To comment on this site, please fill out our feedback form.
Last update: July 9, 1998