Allocating Multiple Units
Pennsylvania State University - Department of Economics; National Bureau of Economic Research (NBER)
Rockwool Foundation Research Unit; Danish National Institute of Social Research (SFI); CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Institute for the Study of Labor (IZA)
This paper studies the allocation and rent distribution in multi-unit, combinatorial bid auctions under complete information. We focus on the natural multi-unit analogue of the first-price auction, where buyers bid total payments, pay their bids, and where the seller allocates goods to maximize his revenue. While there are many equilibria in this auction, only efficient equilibria remain when the truthful equilibrium restriction of the menu-auction literature is used. Focusing on these equilibria we first show that the first-price auction just described is revenue and outcome equivalent to a Vickrey auction, which is the multi unit analogue of a second-price auction. Furthermore, we characterize these equilibria when valuations take a number of different forms: diminishing marginal valuations, increasing average valuations, and marginal valuations with single turning points.
Note: Previously Titled "Allocating Multiple Units by Sealed-Bid Auctions"
Number of Pages in PDF File: 36
Keywords: Menu Auctions, Multiple-Unit Auctions, First-price vs. Second-price Auctions, Revenue Equivalence
JEL Classification: D43, D44working papers series
Date posted: November 30, 2001
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