Existence of Equilibria in Procurement Auctions
9 Pages Posted: 27 Nov 2017
Date Written: November 24, 2017
This paper investigates symmetric equilibria in first- and second-price auctions with multidimensional types. The constructed model mirrors the information structure of actual procurement auctions. We demonstrate by a counterexample that symmetric and continuous type distribution is not a sufficient condition for the existence of a pure-strategy equilibrium, but it is guaranteed if distributions of all components are log-concave. We state a new Revenue Equivalence Theorem applied to first- and second-price auctions and conclude that the two standard auction formats yields the same expected price to the auctioneer.
Keywords: Auctions, Multidimensional Information, Information Asymmetry, Equilibrium Existence
JEL Classification: C62, D44, D82, H57
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