Uniform-price auctions of a divisible good in fixed supply admit underpricing equilibria, where bidders submit high inframarginal bids to prevent competition on prices. The seller can obstruct this behavior by tilting her supply schedule and making the amount of divisible good on offer change endogenously with its (uniform) price. Precommitting to an increasing supply curve is a strategic instrument to reward aggressive bidding and enhance expected revenue. A fixed supply may not be optimal even when accounting for the cost to the seller of issuing a quantity different from her target supply.

Tilting the supply schedule enhances competition in uniform-price auctions

LI CALZI, Marco;
2005

Abstract

Uniform-price auctions of a divisible good in fixed supply admit underpricing equilibria, where bidders submit high inframarginal bids to prevent competition on prices. The seller can obstruct this behavior by tilting her supply schedule and making the amount of divisible good on offer change endogenously with its (uniform) price. Precommitting to an increasing supply curve is a strategic instrument to reward aggressive bidding and enhance expected revenue. A fixed supply may not be optimal even when accounting for the cost to the seller of issuing a quantity different from her target supply.
File in questo prodotto:
File Dimensione Formato  
TiltUPA-Published.pdf

accesso aperto

Tipologia: Documento in Post-print
Licenza: Accesso gratuito (solo visione)
Dimensione 333.62 kB
Formato Adobe PDF
333.62 kB Adobe PDF Visualizza/Apri

I documenti in ARCA sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/10278/22576
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 37
  • ???jsp.display-item.citation.isi??? 27
social impact