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The multiple unit auction with variable supply

Lengwiler, Yvan. (1999) The multiple unit auction with variable supply. Economic theory, Vol. 14, H. 2. S. 373-392.

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Official URL: http://edoc.unibas.ch/dok/A5253744

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Abstract

The theory of multiple unit auctions traditionally assumes that the offered quantity is fixed. I argue that this assumption is not appropriate for many applications because the seller may be able and willing to adjust the supply as a function of 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 formats, but they do that in different ways and for different reasons. Furthermore, both auction formats are inefficient, but there is no unambiguous ordering among them. Finally, the more competitive the bidders are, the more likely the seller is to prefer uniform pricing over price discrimination, yet increased competition among bidders may or may not enhance efficiency.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Finanzmärkte (Lengwiler)
UniBasel Contributors:Lengwiler, Yvan
Item Type:Article, refereed
Bibsysno:Link to catalogue
Publisher:Springer International
ISSN:0938-2259
Note:Publication type according to Uni Basel Research Database: Journal article
Last Modified:22 Mar 2012 14:28
Deposited On:22 Mar 2012 14:03

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