Auctions with Variable Supply: Uniform Price versus Discriminatory

Arbeitspapier

We examine an auction in which the seller determines the supply after observing the bids. We compare the uniform price and the discriminatory auction in a setting of supply uncertainty. Uncertainty is caused by the interplay of two factors: the seller's private information about marginal cost, and the seller's incentive to sell the profit-maximizing quantity given the received bids. In every symmetric mixed strategy equilibrium, bidders submit higher bids in the uniform price auction than in the discriminatory auction. In the two-bidder case this result extends to the set of rationalizable strategies. As a consequence, we find that the uniform price auction generates higher expected revenue for the seller and higher trade volume.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Economics Working Paper Series ; No. 08/80

Classification and Topics

• Classification: Wirtschaft ; Auctions
• Subject: sealed bid multi-unit auctions ; variable supply auctions ; discriminatory and uniform price auctions ; subgame perfect equilibria ; rationalizable strategies ; Auktionstheorie ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Damianov, Damian S. ; Becker, Johannes Gerd
• Event: Veröffentlichung
• (who): ETH Zurich, CER-ETH - Center of Economic Research
• (where): Zurich
• (when): 2008

Further information

• DOI: doi:10.3929/ethz-a-005541937
• Handle: http://hdl.handle.net/10419/171523
• Last update: 10.03.2025, 11:44 AM CET